How did Paul Volcker's contractionary monetary policy in the late 1970s and early 1980s lead to disinflation?

• A. By maintaining a constant inflation rate through stable monetary policy.
• B. By increasing the money supply and lowering interest rates.
• C. By implementing fiscal policies that increased government spending.
• D. By decreasing the money supply and raising interest rates, which reduced inflation rates.

Answer: (D)