What will be the effect of a rise in the bank rate on money supply?
What will be the effect of a rise in the bank rate on money supply?
Anurag Pathak Changed status to publish
The money supply will reduce
Explanation:-
The bank rate is the rate at which the central bank of a country lends money to commercial banks to meet their long-term needs.
A bank rate is a monetary tool to control the money supply in the country.
A rise in Bank rate increases the cost of borrowing from the central bank, which leads to an increase in lending rates by commercial banks.
It discourages borrowers from taking loans, which leads to a decrease in the money supply.
Anurag Pathak Changed status to publish
