What was the response to Germany's expansionary fiscal policy from the German central bank, the Bundesbank?
A) It expanded the money supply to ease rates of interest.
B) It made no policy changes.
C) It contracted the money supply and raised interest rates.
D) It began the process of reverting to a gold standard.

Question

Quizplus · Accepted Answer

The German central bank, the Bundesbank, responded to Germany's expansionary fiscal policy by contracting the money supply and raising interest rates in order to combat inflationary pressures. This policy was in line with the Bundesbank's anti-inflationary mandate and commitment to maintaining price stability.

What Was the Response to Germany's Expansionary Fiscal Policy from the German