The purpose of a restrictive monetary policy is to
A) alleviate recessions.
B) raise interest rates and restrict the availability of bank credit.
C) increase aggregate demand and GDP.
D) increase investment spending.

Question

Quizplus · Accepted Answer

A restrictive monetary policy involves raising interest rates and restricting the availability of bank credit in order to curb inflation and slow down economic growth. It is not meant to alleviate recessions or increase aggregate demand and GDP. While it may lead to a decrease in investment spending, its primary goal is to control inflation.

The Purpose of a Restrictive Monetary Policy Is to