Which of the following would coincide with a tight money policy?
A) Increasing spending.
B) Decreasing interest rates.
C) Decreasing excess reserves.
D) Increasing the money supply.

Question

Quizplus · Accepted Answer

A tight money policy aims to reduce the amount of money circulating in the economy, which can be achieved by decreasing excess reserves. This makes it more expensive or difficult for banks to lend money, effectively reducing the money supply and increasing interest rates.

Which of the Following Would Coincide with a Tight Money