The Central bank in an economy is charged with the responsibility of controlling a nation's money supply to achieve full employment and stable prices. You are a technocrat in the Central Bank, who is drafted on a special committee to assess the implications of the contractionary monetary policies being pursued. The scenario now facing Grossmania is this:

" The national economy is sluggish as a result of tight contractionary monetary policies over the pasttwo years."

A.Describe a proposal to be presented in the second committee meeting, in which you recommend three monetary policy actions to control money supply that may turn the economy around. (15marks)

B.Explain 1 reason why inflation can prevent a country from achieving stability .(5 marks)