3 years ago

Why is the slow growth that can result from a contractionary policy a positive effect

1 answer:

7 0

A slow growth can be good if the economy is not stable: it provides stability. This might be especially important during the time of inflation: when an inflation happens, a quick growth might lead to huge inflation instead and the economy will not grow stronger as a result. In this case a slow, rather than a fast growth, will allow economy to actually grow stronger from the current growth.

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