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A cont ractiona y policy means that the Fed is attempting to increase the size of the nation's money supply decrease the size of the nation's money supply

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A cont ractiona y policy means that
the Fed is attempting to
increase the size of the nation's money supply
decrease the size of the nation's money supply

A cont ractiona y policy means that the Fed is attempting to increase the size of the nation's money supply decrease the size of the nation's money supply

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Carmenélite · Tutor durante 8 años
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The Fed is attempting to decrease the size of the nation's money supply.

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## Step 1<br />A contractionary monetary policy is a form of monetary policy that is typically used to combat inflation. This policy involves the reduction of the money supply in the economy.<br /><br />## Step 2<br />The Federal Reserve (Fed), which is the central bank of the United States, uses this policy to increase interest rates. The goal of this policy is to reduce the money supply in the economy.<br /><br />## Step 3<br />The reduction of the money supply in the economy is done by increasing the interest rates. This is because higher interest rates make borrowing money more expensive, which in turn reduces the money supply in the economy.
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