If he Central Bank wants to encourage an increase in the supply of money and decrease in the cost of borrowing money, it should - (1) lower cash reserve ratio (2) raise discount rates (3) sell government securities (4) All of the above

If he Central Bank wants to encourage an increase in the supply of money and decrease in the cost of borrowing money, it should - (1) lower cash reserve ratio (2) raise discount rates (3) sell government securities (4) All of the above
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(1) lower cash reserve ratio Explanation: When the Central Bank of a country intends to increase money supply, it should lower the Cash Reserve Ratio. A decrease in CRR helps the commercial banks to hold a lesser proportion of their deposits in the form of deposits with the RBI. This increases the amount of Bank deposits and they will lend more as they have more amount as their reserve.
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