Definition of Economic Stimulus
What does the term "economic stimulus" mean? What is meant by the term "economic stimulus"?
Economic stimulus refers to the actions that a government can take to try and stimulate growth in an economy.
For instance - let's say that a country is currently in the midst of a recession after a long period of economic growth.
In order to try and turn things around, the country's government may try different types of economic stimulus in order for the economy to start growing again. Economic stimuli could include interest rates reductions or increased government spending.
The risk in utilizing economic stimuli is that a country runs the risk of inflation if it uses too much. It is a delicate balancing act that governments must perform - not enough stimulus vs too much stimulus.
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