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JAMB Economics 2008 Question 31

Question 31

Financial Institutions

Contractionary monetary policy is used to

  1. A.control inflation
  2. B.bridge the deflationary gap
  3. C.expand the output level
  4. D.deregulate the economy
Show the answer and explanation

Answer: A (control inflation)

Explanation

Contractionary policy reduces money supply and spending, which brings down inflation.