why is the slow growth that can result from a contractionary policy a positive effect?\n○ it can increase…
why is the slow growth that can result from a contractionary policy a positive effect?\n○ it can increase loan interest rates.\n○ it can decrease available credit.\n○ it can increase the money supply.\n○ it can decrease inflation.
Answer
Brief Explanations:
Contractionary policy (like fiscal/monetary tightening) aims to reduce economic activity. Slow growth from it is positive because it combats inflation: reducing spending/demand lowers price pressures. Let's analyze options:
- "Increase loan interest rates" is a policy tool (not a positive effect of slow growth).
- "Decrease available credit" is a tool (not the positive outcome of slow growth).
- "Increase the money supply" is expansionary, opposite of contractionary.
- "Decrease inflation" matches: slow growth reduces demand-pull inflation, making this the positive effect.