_______________________ is when a central bank acts to decrease the money supply in an effort to control an economy that is expanding too quickly.
A) Expansionary monetary policy
B) Expansionary fiscal policy
C) Contractionary monetary policy
D) Contractionary fiscal policy
E) Countercyclical monetary policy

Question

Quizplus · Accepted Answer

Contractionary monetary policy is when a central bank takes action to decrease the money supply, usually by increasing interest rates, in order to slow down an economy that is expanding too quickly and prevent inflation from getting out of control. Expansionary monetary policy, on the other hand, involves increasing the money supply to stimulate economic growth and fight recession. Fiscal policy relates to government spending and taxation, and can also be either expansionary or contractionary depending on the goals of policymakers. Countercyclical policies are designed to offset the ups and downs of the business cycle and stabilize the economy.

_______________________ Is When a Central Bank Acts to Decrease the Money