ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Federal Open Market Committee (FOMC) might decide to use expansionary monetary policy to provide stimulus for the economy. That is, the FOMC could lower its target range for the federal funds rate (FFR).

Detailed explanation-2: -Stimulating Expansionary Monetary Policies. The central bank will often use policy to stimulate the economy during a recession or in anticipation of a recession. Expanding the money supply is meant to result in lower interest rates and borrowing costs, with the goal to boost consumption and investment.

Detailed explanation-3: -Expansionary policy can consist of either monetary policy or fiscal policy (or a combination of the two). It is part of the general policy prescription of Keynesian economics, to be used during economic slowdowns and recessions in order to moderate the downside of economic cycles.

Detailed explanation-4: -Tight monetary policy is an action undertaken by a central bank such as the Federal Reserve to slow down overheated economic growth. Central banks engage in tight monetary policy when an economy is accelerating too quickly or inflation-overall prices-is rising too fast.