Question

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


A.
easy monetary policy


B.
laissez faire policy


C.
tight monetary policy


D.
money creation policy

Answer 1

C. tight monetary policy

In an inflationary economy, tightening monetary policy is typically implemented to reduce inflation. This can involve raising interest rates, reducing the money supply, or other measures aimed at curbing excessive spending and borrowing, ultimately stabilizing prices.