What monetary policy involves decreasing the money supply

A Contractionary  monetary  policy also known as Restrictive monetary policy,  involves decreasing the money supply to achieve an increase in interest rates thus provoking a reduction on investments and consumption in that particular economy.

The principal objective of Contractionary or Restrictive policy is to fight inflation which can be a sign that that the economy is overheated. When this happens, the central bank wants to slow slow the economic growth by making lending more expensive when they increase interest rates.  

There are many reasons for a government to implement a Contractionary fiscal policy and the most commons are, when it believes that the economy is suffering from high inflation and when the national debt of the country is too high.

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