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Question :  ___________ is a process where the central bank reduces the money supply in the economy.

 

Option 1: Contractionary monetary policy

Option 2: Expansionary monetary policy

Option 3: Quantitative easing

Option 4: Open market operations


Team Careers360 18th Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: Contractionary monetary policy


Solution : The correct answer is (a) Contractionary monetary policy. 

Contractionary monetary policy refers to the actions taken by the central bank to reduce the money supply in the economy, typically with the aim of controlling inflation and curbing excessive economic growth. 

Contractionary monetary policy is employed when there is a need to control inflationary pressures or to address an overheating economy with excessive credit growth.

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