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What will be the effect of an increase in the ‘Repo Rate on the Money Supply?
Money supply will increase
Money supply will decrease
Money supply will remain the same
Money supply will initially increase and then it will decrease
Increase in the Repo Rate force the commercial bank to increase the interest rate on advancing loans. It discourages the borrower to avail loan from bank. Thus money supply will decrease.
By: santosh ProfileResourcesReport error
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