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What is stimulus package?



A stimulus is a package of economic measures put together by a Govt. to stimulate a floundering economy. The objective of a stimulus package is to reinvigorate the economy and prevent or reverse a recession by boosting employment and spending.

Types of Stimulus

  1. Monetary Stimulus
  2. Fiscal Stimulus
  3. Quantitative Easing

The monetary stimulus consists of cutting interest rate where fiscal stimulus has a cutting taxes or increased spending. Quantitative easing is an expansionary monetary policy in which the country's central bank purchases a large number of financial assets such as bonds from commercial banks and other financial institutions.

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