When the central bank sells securities in the market the credit creation capacity of the commercial ...........

When the central bank sells securities in the market, the credit creation capacity of the commercial banks is likely to:-

Rise

Fall

May rise or may fall

No effect

Explanation:

When central bank sells securities in the market. The general public purchase such securities because of trustworthy investment. They make payment through cheque from their bank account in commercial bank. The Amount in bank deposits fall. It further reduces the credit creation capacity of the commercial bank.