When the economy is in a recession,

Question

Quizplus · Accepted Answer

Expansionary monetary policy, such as decreasing interest rates or increasing money supply, can stimulate borrowing and spending, leading to an increase in real output in both the short run and long run. This is because increased spending creates demand for goods and services, which increases production and employment in the economy. However, the effects on the economy may take time to fully materialize, and there may be some trade-offs, such as higher inflation in the long run due to increased money supply.

When the Economy Is in a Recession