Question on: JAMB Economics - 2019
A contractionary monetary policy is used to control__________
A
Deflation
B
Inflation
C
Recession
D
Balance of Payment deficit
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Correct Option: B
A contractionary monetary policy is used to control inflation, to stabilise the price level exchange rate and achieve equilibrium in the balance of payment and also promote economy development. It is used to balance payment surplus and there is increase in interest rate or cash reserve ratio thereby reducing investment and output.
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