Prolonged periods of monetary contraction, as was the case during the Great Depression, will likely result in
A) an increase in real output and employment.
B) an increase in loanable funds and upward pressure on the rate of inflation.
C) a decrease in output and downward pressure on prices.
D) a decrease in unemployment and upward pressure on prices.

Question

Quizplus · Accepted Answer

Monetary contraction typically reduces the money supply, leading to lower spending, decreased demand, reduced output, and downward pressure on prices, as seen during the Great Depression.

Prolonged Periods of Monetary Contraction, as Was the Case During