A contractionary monetary policy is appropriate during a recession.

Question

Quizplus · Accepted Answer

A contractionary monetary policy involves reducing money supply and raising interest rates to control inflation. This is not appropriate during a recession as it can worsen the economic downturn by reducing consumer spending and business investment. Instead, an expansionary monetary policy, which involves increasing money supply and lowering interest rates, is more appropriate during a recession to stimulate economic growth.

A Contractionary Monetary Policy Is Appropriate During a Recession