Contractionary Monetary Policy | Macroeconomics

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This content is about contractionary monetary policy, a policy used by central banks to decrease aggregate demand and slow the economy. This is done by reducing investment via interest rates and other methods such as raising the discount rate, the minimum reserve requirement, and open market operations. This policy has the goal of bringing the economy back to full employment levels and keeping inflation at a desirable level. Contractionary fiscal policies such as tax increases are generally less popular than contractionary monetary policies."