Question

Suppose that, in an attempt to combat severe inflation, the government decides to decrease the amount of money in circulation in the economy. This monetary policy________.

Answer 1

Answer:

This monetary policy the economy demand for goods and the services which lead to product prices.

Explanation:

Now in the short run, the change in the prices induce firms to produce goods and services. this in turn, lead to a level of unemployment. in other words, the economy faces a trade off between unemployment and inflation.