MarionGood MarionGood
  • 06-03-2018
  • Social Studies
contestada

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

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L1ly5268 L1ly5268
  • 06-03-2018
It can decrease inflation if this is from the same test I took. Sorry if this is wrong:(
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ailud18
ailud18 ailud18
  • 25-01-2019

the slow growth that can result from a contractionary policy is a positive effect as it can decrease inflation.

If the economy is growing too fast  and causing inflation, governments or central banks can slow it down by increasing interest rates and reducing the rate of the money supply. In other words, by implementing a contractionary policy.

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