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16. What monetary policy should be implemented to correct an inflationary economy?

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tight monetary policy

User Hzhu
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Answer: Contractionary monetary policy

Explanation: Contractionary monetary policy should be implemented to correct an inflationary economy.

As a method of contolling inflation, contractionary monetary policy aims at reducing the circulating money supply within an economy .Consequently,

to achieve this,bond prices are reduced and interests rates increased.

User Meaningqo
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