Concept:The bank rate is the interest rate at which the Central Bank lends money to commercial banks.
Explanation:When the Central Bank raises its bank rate, commercial banks now pay more to borrow from the Central Bank.
These banks pass the higher cost on to their customers by increasing their own lending interest rates.
Higher interest charges discourage customers from taking loans.
When fewer loans are granted, less money enters the economy through bank lending.
As a result, the total money in circulation decreases, meaning the money supply is reduced.
Option A, B, and D are incorrect because banks do not shut down, customers do not borrow more, and interest charges do not fall.
Answer:C. the supply of money may be reduced