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

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asked Jul 14, 2016 160k views

2 Answers

Osher · Answer 1 · 2016-07-21T05:56:02+0000

The correct answer, assuming that it is a multiple choice question is that is can decrease inflation. The government uses as its tool the decision to increase interest rates, which will encourage saving and discourage spending and so decrease inflation.

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

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