ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Expansionary policy occurs when a monetary authority uses its procedures to stimulate the economy. An expansionary policy maintains short-term interest rates at a lower than usual rate or increases the total supply of money in the economy more rapidly than usual.

Detailed explanation-2: -During a recession, loose monetary policy can help the economy recover by sparking aggregate demand because individuals and firms are able to borrow more to spend and invest.

Detailed explanation-3: -There are four major things the Fed can do to curb a recession: Reduce the reserve ratio-If banks don’t have to keep as high a percentage of their assets in reserves, they have more accessible money. This might lead them to offer more attractive loans to their customers, which can help boost economic growth.

Detailed explanation-4: -How Does an Economy Recover From a Recession? Economies recover from a recession after a period of economic adjustment in the markets. Economies also recover through fiscal stimulus programs. Both the central bank and the government impact the economy through monetary policy and fiscal policy, respectively.