Taking the state of the economy into account, a contractionary monetary policy ______?

Sometimes the shape of the aggregate supply curve is an indicator of the economy's current status, and thus an indicator of the effectiveness of implementing monetary policy.





Taking the state of the economy into account, a contractionary monetary policy __________.














A. Will have no effect at all on the economy





B. Will be very effective without decreasing output too much





C. Will be relatively ineffective and will cause a substantial decrease in output





D. Will be very effective, but will cause a substantial decrease in output

Taking the state of the economy into account, a contractionary monetary policy ______?
D. Will be very effective, but will cause a substantial decrease in output





as such a policy is imposed to reduce the supply of money in the economy which would result in a decrease of output.