Which of the following is associated with a contractionary monetary policy?

Question

Quizplus · Accepted Answer

Selling bonds reduces the money supply as it takes money out of circulation. This is a contractionary monetary policy as it decreases the availability of money in the economy. Lowering the differential between the discount rate and the federal funds rate (A) and lowering the required reserve ratio (C) are both expansionary monetary policies as they increase the availability of money in the economy. Raising bond prices (D) is not directly associated with either expansionary or contractionary monetary policy.

Which of the Following Is Associated with a Contractionary Monetary