A.Assume the central bank reduces the money supply. How will it affect the financial markets and, thereby, consumer and investment spending in the economy? B. Why does the central bank resort to...

A.Assume the central bank reduces the money supply. How will it affect the financial markets and, thereby, consumer and investment spending in the economy?

B. Why does the central bank resort to preemptive rise in interest rates when the economy is reviving? Why cannot it wait for prices to actually rise beyond the accepted level, before slowing down the economy?