Arrange the following in sequence for the impact on economy when central bank raises Repo rate:

A. People will take less loan.
B. Money supply will decrease in economy.
C. Borrowing become costlier.
D. Commercial banks will increase interest rate.
E. Aggregate demand will decrease.

Choose the correct answer from the options given below:

D, C, A, B, E

The correct answer is Option (3) → D, C, A, B, E

D. Commercial banks will increase interest rate: The first impact is on commercial banks. When the central bank increases the Repo rate, the cost of borrowing for commercial banks from the central bank goes up.
C. Borrowing become costlier: As a result of higher Repo rate, commercial banks raise their own lending rates. This makes borrowing more expensive for businesses and consumers.
A. People will take less loan: Due to costlier borrowing, people and businesses will likely take fewer loans for investments or purchases, leading to a decrease in overall loan demand.

B. Money supply will decrease in economy: With higher interest rates, people and businesses are less likely to borrow and spend, leading to a decrease in money circulation in the economy.

E. Aggregate demand will decrease: With reduced borrowing and spending (due to higher interest rates), the total demand for goods and services in the economy (aggregate demand) will decrease.