A fall in Bank rate can increase the ________ .
A fall in Bank rate can increase the ________ .
Solution
✅ Correct Option: 1
A fall in the bank rate makes borrowing from the central bank cheaper for commercial banks. They in turn lend more to the public at lower rates, so credit creation expands and the money supply increases. While GDP may indirectly rise later, the direct, immediate effect highlighted in NCERT is on money supply.
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