To curb rising inflationary pressures, a central bank decides to implement a contractionary monetary policy stance. Which of the following combinations of policy measures is consistent with this objective?
An increase in the policy interest rate and the sale of government bonds to the banking sector
A reduction in the policy interest rate and the purchase of government bonds from the financial sector
An increase in the policy interest rate and an increase in government capital expenditure
A reduction in the cash reserve ratio for commercial banks and a reduction in corporation tax rates
