QQuestionEconomics
QuestionEconomics
What monetary policy involves decreasing the money supply?
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Answer
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Step 1I'll solve this problem following the specified formatting guidelines:
Step 2: Identify the Monetary Policy
The monetary policy that involves decreasing the money supply is contractionary monetary policy. This is a strategy used by central banks to slow down economic growth and control inflation.
Final Answer
Contractionary monetary policy is the monetary policy that involves decreasing the money supply through mechanisms like selling government securities, increasing bank reserve requirements, and raising interest rates.
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