What are the 3 situations wherein Monetary Policy helps

the economy of a certain nation?

1. Neutral situation

2. Expansionary situation

3. Contractionary situation

Explanation:

According to the Macro-Economists, there are 3 situations wherein Monetary Policy helps

the economy of a certain nation. These include:

1. Neutral situation: a neutral monetary policy is used when the economy of the nation is believed to be at equilibrium or stable. Instead of affecting the economy, the country seeks to maintain it.

2. Expansionary situation: expansionary monetary policy is applied a nation is under recession and needs to spend to get out of the situation. Here, the budget of a nation is always over the expenditure.

3. Contractionary situation: confectionary policy is used when a national economy is growing at faster rates and the government feel the need to slow down a bit to manage the situation well

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