what monetary policy reduces inflation 
opposite of expansionary policy the federal reserve may also enact contractionary policies these policies are meant to slow the economy make debt more expensive to come by and shrink the money supply by slowing the economy reducing consumer demand and slowing business growth inflation often slows though unemployment is put at risk to increase the bottom lineexpansionary policy is a set of economic measures taken by a government or central bank to stimulate economic growth these policies are intended to increase demand and aggregate spending the goal of expansionary policy is to boost the economy during periods of slow growth or recession though it may unintentionally increase the rate of annual inflation 