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

In order to decrease the money supply in economy, the RBI will increase the bank rate and statutory liquidity ratio. When there is a rise in SLR and bank rate it implies that bank will be left with less money to supply in the economy i.e. decrease in the money supply. Bank rate is the lending rate at which commercial banks can borrow from the RBI without providing any security. Whereas, SLR is a minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities. Tax rate is not managed by the RBI, it is a part of fiscal policy.