Business Economics
Contractionary monetary policy is a macroeconomic tool used by central banks to reduce the money supply and increase interest rates, aimed at slowing down economic activity and curbing inflation. By making borrowing more expensive and saving more attractive, this policy works to decrease aggregate demand and stabilize prices. It plays a crucial role in managing the economy, particularly when inflation is perceived to be too high.
congrats on reading the definition of contractionary monetary policy. now let's actually learn it.