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WAEC Economics 2014 Question 9

Question 9

Financial Institutions

To control inflation, the central bank of a country may adopt

  1. A.an expansionary monetary policy.
  2. B.a restrictive monetary policy.
  3. C.an increased wage policy.
  4. D.a deficit financing policy.
Show the answer and explanation

Answer: B (a restrictive monetary policy.)

Explanation

A restrictive (tight) monetary policy reduces money supply and spending, bringing prices down.