If strong monetary policy stimulus is used to combat a recessionary gap, what will happen?

Question

Quizplus · Accepted Answer

Strong monetary policy stimulus would lead to lower interest rates and increased money supply, which in turn would stimulate spending and investment. This would lead to a rapid movement toward lower unemployment as businesses and households increase their spending. As demand for goods and services increases, prices would also rise, causing inflation to increase as well. Therefore, there would be a rapid movement toward both lower unemployment and higher inflation.

If Strong Monetary Policy Stimulus Is Used to Combat a Recessionary