Monetary stimulus is most helpful to an economy

Question

Quizplus · Accepted Answer

Monetary stimulus, such as lowering interest rates or increasing the money supply, is intended to boost economic activity and promote growth. These measures are most effective in an economy that is experiencing a slowdown or recession because businesses and consumers are more likely to respond by increasing spending and investment. In an economy with high inflation, monetary stimulus could potentially exacerbate the problem by increasing demand and further driving up prices. Negative externalities and the presence or absence of public goods are not directly related to the effectiveness of monetary stimulus.

Monetary Stimulus Is Most Helpful to an Economy