A fall in the bank rate _ _ _ _ _ _ _ the money supply.

Increases

The correct answer is option (2) : Increases

The bank rate refers to the interest rate at which central banks lend to commercial banks. When the central bank (like the Reserve Bank of India) reduces the bank rate, it becomes cheaper for commercial banks to borrow money from the central bank. This, in turn, encourages commercial banks to borrow more funds, which they can then lend out to businesses and individuals. This, in turn allows commercial banks to lend more money to businesses and consumers at lower interest rates, which encourages borrowing and spending. Increased borrowing and spending  by businesses and consumers result in a higher supply in the economy.