Q. Which of the following actions would increase the money supply in the economy?

1. A scheduled commercial bank issuing a cheque to its customer
2. Reduction in Cash Reserve Ratio (CRR)
3. A customer depositing money in a scheduled commercial bank
4. RBI issuing fresh currency

Select the correct answer using the codes given below:
Answer: Only 2 and 4
Notes: Reduction in CRR increases lending capacity, injecting liquidity. RBI issuing fresh currency directly increases the monetary base. Issuing a cheque or a customer depositing money only transfers funds within the system, not increasing the total money supply. Therefore, only reduction in CRR and RBI issuing new currency raise the money supply in the economy.