ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An increase in the supply of money typically lowers interest rates, which in turn, generates more investment and puts more money in the hands of consumers, thereby stimulating spending.

Detailed explanation-2: -A larger money supply lowers market interest rates, making it less expensive for consumers to borrow. Conversely, smaller money supplies tend to raise market interest rates, making it pricier for consumers to take out a loan.

Detailed explanation-3: -You have supply of money (by central bank) and then you have demand for money by people. Interest rate ensures that demand for money = supply of money. If supply increases (shift to the right) interest rate has to decrease otherwise people would not be willing to get and hold that additional money.

Detailed explanation-4: -A rise in the bank rate means that the interest charge from commercial banks will increase and it would force commercial banks to increase their interest which will reduce the borrowing by general public and interest rate is high, so the money supply would decrease.