Explanation:

When interest rates go up, people become less interested in holding money since holding money amounts to holding less of interest-earning deposits, and thus less interest received. Therefore, at higher interest rates, money demanded comes down.

• The policy rate is the key lending rate of the central bank in a country. It is a monetary policy instrument under the control of the Central Bank. In India, it is decided by the Reserve Bank of India.

Hence only statement 1st is correct.