Quantitative instruments of monetary policy affect the volume of money supply in the economy.
Quantitative instrument of monetary policy comprises the following measures:
1. Repo Rate Policy
2. Bank Rate Policy
3. Reverse Repo Rate Policy
4. Open Market Operations
5. Legal Reserve Requirements
These measures directly affect the volume of the money supply.
For example: If RBI raises the Bank Rate. It encourages commercial banks to raise the rate of interest on all types of the loans.
It decreases loan applications from public.
It decreases the demand deposits. Thus money supply decreases