Finance, Forex and Investments

The central bank decided to implement a contractionary policy action. What would you expect to happen to the n

Public Comments

1. im not sure what it means when you say what would you expect to happen to the "n" this n is not clearn to me But contractionary monetary policy means that they are increasing interest rates, in an attempt to contract the economic activity. There are many reasons why the central bank may do this, but in all cases it is to curb the effects of inflation. This statement holds true in the modern area. About 20 years ago ecnomist tried controlling both inflation and exchange rates and it did not work. So the central banks across world generally aim to control the effects of inflation. Apart from countries like China there exchange rate pegging system is very complex and requires some specific study. hope this sovled your problem