Contractionary monetary policy is a(n)________ in interest rates with the intention of reducing a(n)________ gap.
A) reduction;expansionary
B) reduction;recessionary
C) reduction;inflationary
D) increase;expansionary
E) increase;recessionary

Question

Quizplus · Accepted Answer

Contractionary monetary policy involves increasing interest rates to reduce an expansionary gap, which occurs when an economy is producing beyond its potential output, often leading to inflation.

Contractionary Monetary Policy Is A(n)________ in Interest Rates with the Intention