When a Central Bank takes action to decrease the money supply and increase the interest rate, it is known as a contractionary monetary policy.
Modern central banks' influence over higher base interest rates or other mechanisms that expand the money supply are what propel contractionary monetary policy. By reducing the amount of active money circulating in the economy, inflation is to be decreased.
In order to raise interest rates, reduce investment and consumption, and increase savings rates, a contractionary monetary policy includes reducing the money supply.
Learn more about contractionary monetary policy here https://brainly.com/question/27500362
#SPJ4
