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Decreases in gross domestic product

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From you reading, it is clear that contractionary monetary policy decreases the money supply in an economy. When there is a decline in money supply, it will contribute to decreases in Gross Domestic Product. Decrease in money supply also means less consumer spending. These results in shifting the aggregate demand. In what ways can we counter-balance the shifting of AD to the left? What happens in we have expansionary monetary policy.

Reference no: EM131282634

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