contractionary policy

Popular Terms
A variation of federal fiscal policy with the goal of slowing down a rapidly expanding economy. The objective is to curb inflation by restricting the money supply. By tightening the money supply, spending is discouraged. The policy can be enacted by: 1) increasing interest rates, 2) raising bank reserve requirements or 3) taking money out of circulation (raising bond rate to encourage long-term borrowing).

Use 'contractionary policy' in a Sentence

The contractionary policy was in place and that was good because it would help if things did not go as planned.
16 people found this helpful
You need to make sure that you follow any contractionary policy so that you are doing everything you are obligated to.
15 people found this helpful
Over time the contractionary policy hoped to control the increasingly high inflation growth rate without causing a large amount of unemployment in the economy.
14 people found this helpful

Email Print Embed