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if is implemented in the u.s. we would then expect, through the change in the currency valuation, the inflation rate in the u.s. to Contraction monetary policy Decrease
When the central bank adopts a contractionary monetary policy for the economy, the money supply declines as a result, leading to an increase in interest rates that make borrowing more expensive. They as a result of declining money supply. the overall demand declines In the "economy," inflation declines. When a central bank employs its monetary policy tools to combat inflation, that practise is known as contractionary monetary policy. This is how the bank modifies economic expansion. An economy that is running too hot will have inflation. In order to prevent inflation, contractionary monetary policy attempts to slow down or even restrict economic growth. It basically slows growth by increasing interest rates and constricting the money supply. Consumers cut back on their spending as a result of higher interest rates, particularly when using credit cards.
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