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MrRissso [65]
3 years ago
6

Which best explains how contractionary policies can hamper economic growth? They increase demand. They help increase consumer de

bt. They reduce consumer confidence. They reduce disposable income.
Social Studies
2 answers:
Agata [3.3K]3 years ago
3 0

Answer: They reduce disposable income.

Contractionary money policy is used to combat inflation. The policy involves decreasing the money supply through increase in the discount rate or sale of government bonds or increase in the reserve ratio.

Contractionary policy increases the cost of borrowing. This decreases GDP and dampens inflation, but it also leads to reduced disposable income. Another negative side effect is an increase in the unemployment rate.


Alekssandra [29.7K]3 years ago
3 0

They reduce disposable income

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