Loan offer by commercial Bank is increase/decrease the money supply
Answers
In Macroeconomics,an increase in money supply leads to higher financial mobility and liquidity in the economy which increases loans offered by commercial banks
Explanation:
When the central bank in any country increases money supply through open market operations or manipulating the reserve ratio,it basically increases the financial or monetary liquidity in the economy to stimulate overall economic activities and economic growth.This would consequently encourage higher financial lending by banks at all levels and the business or capital investors to increase borrowings and further invest in various business and commercial endeavors in the economy.It will also increase the lending activities of individual bank customers and households ,which will further enhance the overall consumption level in the economy.Therefore,basically a rise in money supply consequently increases the lending activities or loans offered by the commercial banks in the economy and enhances the overall financial mobility or liquidity.