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Contractionary monetary policy is used to

Economics
JAMB 2008

Contractionary monetary policy is used to

  • A. control inflation
  • B. bridge the deflationary gap
  • C. expand the output level
  • D. deregulate the economy
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Correct Answer: Option A
Explanation

Contractionary monetary policy is when central banks raise interest rates and reduce the money supply to avoid inflation.

The goal is to reduce inflation by limiting the amount of active money circulating in the economy.


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