If RBI lowers the Cash Reserve Ratio (CRR), then I. supply of money in the economy may increase. II.…

The correct choice is: “I”

The CRR is the share of their deposits that banks must keep with the RBI as cash. When the RBI lowers the CRR, banks have more funds available to lend, so credit and the money supply may increase (statement I is true). With more loanable funds, banks tend to reduce, not increase, their lending rates, so statement II is wrong. Exports becoming cheaper depends on the exchange rate and costs of production; it is not a direct consequence of a CRR cut, so statement III does not follow. Only I is correct.