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An increase in cash ratio by the central bank will  

Economics
WAEC 2025

An increase in cash ratio by the central bank will

 

  • A. increase banks' lending
  • B. increase the supply of money
  • C. reduce the supply of money
  • D. encourage borrowing
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Correct Answer: Option C
Explanation

The cash ratio is a measure of a bank's liquidity and ability to meet its obligations. An increase in the cash ratio by the central
bank means that banks are required to hold more reserves and thus, they have less money to lend out. This reduces the supply of
money in the economy.


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