High inflation imposes various costs on society. Policymakers can maintain a slow growth in the quantity of money to keep inflation at a low level.
Contractionary monetary policy is more widely used today to combat inflation. By raising interest rates, a contractionary policy seeks to reduce the amount of money in an economy. 5 Credit becomes more expensive as a result, which lowers consumer and company expenditure and slows economic growth.
What is Contractionary monetary policy?
Modern central banks' influence over higher base interest rates or other mechanisms that expand the money supply are what propel contractionary monetary policy. By reducing the amount of active money circulating in the economy, inflation is to be decreased.
Therefore,
High inflation imposes various costs on society. Policymakers can maintain a slow growth in the quantity of money to keep inflation at a low level.
To learn more about Contractionary monetary policy from the given link:
https://brainly.com/question/9046840
#SPJ4
