An increase in cash ratio by the central bank will_______

An increase in cash ratio by the central bank will reduce the supply of money. Cash ratio refers to the proportion of cash that commercial banks are required to hold in reserve with the central bank. When the central bank increases the cash ratio, it is essentially increasing the amount of cash that commercial banks must hold in reserve, which in turn reduces the amount of money available for lending and other economic activities. This reduction in the amount of money available in the economy reduces the supply of money. Therefore, an increase in the cash ratio by the central bank will not increase the supply of money, increase bank lending or encourage borrowing, but will reduce the supply of money available in the economy.