The Central bank in an economy is charged with the responsibility of controlling a nation’s money supply to achieve full employment and stable prices. You are a technocrat in the Central Bank, who is drafted on a special committee to assess the implications of the contractionary monetary policies being pursued. The scenario now facing Grossmania is this:
” The national economy is sluggish as a result of tight contractionary monetary policies over the past two years.”
A, Explain in the committee meeting, in which you recommend three monetary policy actions to control money supply that may turn the economy around.
B. Explain 1 reason why inflation can prevent a country from achieving stability