n NISM Certifications
XV NISM Series XV
Medium

When a central bank of a country follows contractionary monetary policy, the result can be _______.

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    A decrease in rates of interest

  2. B

    A fast increase in the money supply

  3. A decrease in the flow of credit to borrowers

    Correct answer

  4. D

    All of the above

Why this is the answer

Contractionary policy raises interest rates and restricts money supply, reducing credit availability.

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