Concept:Inflation occurs when there is too much money chasing too few goods.
So it can be curbed by reducing the money supply.
Explanation:One effective way to reduce the money supply is through open market operations.
When the government sells securities in the open market, the public buys them with cash.
This withdraws money from circulation.
As the money supply falls, purchasing power in the economy decreases.
Demand for goods and services falls, which reduces upward pressure on prices.
This helps control inflation.
In contrast, buying treasury bills would inject money into the economy and increase inflation.
Similarly, increasing government spending or encouraging banks to lend would raise the money supply.
Thus, selling securities is the correct contractionary policy.
Answer:B. selling securities in the open market