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

Question

Quizplus · Accepted Answer

Contractionary monetary policy involves the central bank selling bonds, which decreases the money supply and increases the interest rate. This can help control inflation but may also slow economic growth. Options A and B are incorrect because they involve the central bank purchasing bonds, which would be expansionary monetary policy. Option D is also incorrect because selling bonds would increase the interest rate, not decrease it.

Which of the Following Generally Occurs When a Central Bank