Which Scenario Indicates That A Contractionary Monetary Policy Is Needed in How To

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Which Scenario Indicates That A Contractionary Monetary Policy Is Needed. Inflation is a sign of an overheated economy. Muxakara and 124 more users found this answer helpful.

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Nthe bank’s reserve assets are reduced and money supply falls. Central bankers in widgetsa have decided that inflation is too high and contractionary monetary policy is needed. It's also called a restrictive monetary policy because it restricts liquidity.

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The economy is growing rapidly. A contractionary monetary policy aims to slow down an economy that's rising too fast, threatening a runaway jump in prices. Prices of fungible commodities in parti. In addition, the decrease in the money supply will lead to a decrease in consumer spending.