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Executing Restrictive Monetary Policy

Contractionary monetary policy

Contractionary monetary policy

Contractionary monetary policy results in a reduction in the money supply, depicted as a leftward shift, which results in an increase in interest rates as well as a decrease in the quantity of loanable funds.

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    http://moeller.wikispaces.com/file/view/graph2.GIF/72394431/graph2.GIF CC BY-SA.

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