Which of the following generally occurs when a central bank pursues contractionary monetary policy?

Question

Quizplus · Accepted Answer

When a central bank pursues contractionary monetary policy, it is trying to decrease the money supply in the economy. One way it can do this is by selling bonds, which removes money from circulation. When the central bank sells bonds, it decreases the demand for bonds and increases the supply of bonds, causing the bond prices to fall and the interest rates to rise. Therefore, option A is the correct answer.

Which of the Following Generally Occurs When a Central Bank