Arrange the sequence of events relating to Bank Rate in the proper order.
(A) Loans taken by the commercial banks will become more expensive.
(B) This will decrease the money supply in the economy.
(C) Suppose the Reserve Bank of India increases the Bank Rate.
(D) This reduces the reserve held by the commercial banks.
Choose the correct answer from the options given below :
(

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(C), (A), (D), (B)

(B), (A), (D), (C)

(D), (B), (C), (A)

(A), (B), (C), (D)

Correct Answer

(C), (A), (D), (B)

The correct sequence of events relating to the Bank Rate increase is as follows:

An increase in the Bank Rate by the Reserve Bank of India. (C)
This increase in the Bank Rate makes loans taken by commercial banks more expensive (A).
As loans become more expensive, it reduces the reserve held by commercial banks (D).
The reduction in reserves decreases the money supply in the economy (B).

So, the correct order is (1) (C), (A), (D), (B).