Contractionary monetary policy a. leads to disinflation and makes the short-run phillips curve shift left. b. leads to disinflation and makes the short-run phillips curve shift right. c. does not lead to disinflation but makes the short-run phillips curve shift left. d. does not lead to disinflation but makes the short-run phillips curve shift right.

Question

Gage Mccarty

Business

19 December, 07:43

Contractionary monetary policy a. leads to disinflation and makes the short-run phillips curve shift left. b. leads to disinflation and makes the short-run phillips curve shift right. c. does not lead to disinflation but makes the short-run phillips curve shift left. d. does not lead to disinflation but makes the short-run phillips curve shift right.

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Skyler Huffman · Answer 1

This is a kind of economic policy used to contest inflation which includes decreasing the money supply in order to raise the cost of borrowing which in order decreases GDP and reduces inflation. This leads to disinflation and creates the short-run Phillips curve move to the left. So the answer is A.