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23 December, 03:50

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

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  1. 23 December, 05:43
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    tight monetary policy
  2. 23 December, 07:01
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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.
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