💡Inflationary gaps occur when the economy is producing above the full employment level, causing high inflation.
✅The goal of contractionary monetary policy is to decrease aggregate demand and slow down the economy until it reaches full employment.
🔍An increase in population or high demand for goods can lead to an inflationary gap.
📉Contractionary monetary policy is implemented through actions by the central bank to decrease economic growth.
💸High inflation can be controlled through contractionary monetary policy, which aims to keep inflation at a desirable level.