________ policy is when a central bank acts to decrease the money supply in an effort to control an economy that is expanding too quickly.
A) Expansionary monetary
B) Expansionary fiscal
C) Contractionary monetary
D) Contractionary fiscal
E) Countercyclical monetary

Question

Quizplus · Accepted Answer

Contractionary monetary policy is used to control an economy that is expanding too quickly. By decreasing the money supply, the central bank aims to slow down economic growth and prevent inflation from rising too fast. Expansionary monetary policy, on the other hand, is used to stimulate economic growth by increasing the money supply. Expansionary fiscal policy involves an increase in government spending or a decrease in taxes to boost economic activity, while contractionary fiscal policy involves a decrease in government spending or an increase in taxes to slow down the economy. Countercyclical monetary policy is a broader term that refers to policies aimed at stabilizing the economy during periods of economic volatility, regardless of whether they involve an increase or decrease in the money supply.

________ Policy Is When a Central Bank Acts to Decrease