Question

Loans offered by commercial banks (increase/decrease) the money
supply in the economy.
(Fill up the blank with correct alternative.)​

Answer 1

Answer:

decrease

Explanation:

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Answer 2

Providence of financial loans by commercial banks would increase the overall money supply in the economy.

Explanation:

The money supply is a specific tool used by the Central Bank in any country to control or manipulate the monetary policy in the economy.Central Bank is the main monetary authority in any country for overseeing and administering the entire monetary and financial mechanism in the economy.Now,the loans offered by commercial banks in the economy is an indication of the Central Bank has reduced the reserve requirement of the banks in the country which results in higher loan issuance by the banks and a consequent increase in money supply in the economy.