Reserve bank of India, with the help of monetary policies try to influence the money supply. Which of the following would result in decrease in the money supply in the economy?

1. Increase in the bank rate
2. Increase in the tax rate
3. Increase in the cash reserve ratio
4. Decrease in statutory liquidity ratio

1 and 3

The correct answer is Option 1: 1 and 3

o decrease the money supply in the economy, the Reserve Bank of India (RBI) can employ various monetary policy tools. Let's analyze each option:

1. Increase in the bank rate: An increase in the bank rate (the rate at which the central bank lends to commercial banks) makes borrowing more expensive for banks. This can lead to a reduction in the money supply as banks will lend less.

2. Increase in the tax rate: While increasing the tax rate can reduce disposable income and hence reduce spending, it is a fiscal policy tool rather than a monetary policy tool. 

3. Increase in the cash reserve ratio (CRR): An increase in CRR (the percentage of deposits banks are required to keep with the central bank) reduces the amount of money banks have available to lend. This decreases the money supply.

4. Decrease in the statutory liquidity ratio (SLR): A decrease in SLR (the percentage of banks' net demand and time liabilities that must be kept in liquid assets) allows banks to hold fewer liquid assets and thus increase lending, which would increase the money supply.