<u>A. is the correct answer.
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<u>(Black) monetary policy involves decreasing the money supply is contractionary.
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Further explanation:
Monetary policy:
Monetary policy is controlled by the central authority of the country. The interest rates are being determined by the central bank. It involves management or control of the money supply to control the inflation rate and liquidity. To maintain the economic stability in the economy.
Justification for the correct and incorrect answer:
A. Contractionary: This option is correct.
Decreasing the money supply in the economy is known as contractionary monetary policy. To control the inflation rate.
B.Expansionary: This option is incorrect.
Expansionary is just the opposite of the contractionary monetary policy in which, it uses the tool to increase the money supply in the economy.
C. Fixed: This option is incorrect.
A fixed policy is such a policy in which the government does not change the policy, whether there is inflation or deflation.The government fixes the rates for the exchange.
<u>Thus, the (Black) monetary policy involves decreasing the money supply is called contractionary monetary policy so as to control the inflation rate in the economy. Monetary policy is controlled by the central bank of the country.
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Answer details:
Grade: High School
Subject: Business
Chapter: Monetary policy
Keywords: Blank monetary policy involves decreasing the money supply, contractionary, expansionary, fixed,
