Economic stimulus is when the government boosts private sector growth during a recession. “Fiscal stimulus” includes reducing taxes, regulation reduction and deficit spending. Then there is “monetary stimulus” done by central banks such as interest rate cuts.
During a recession economic growth slows and demand for products decreases. A stimulus package is a combination of fiscal and monetary actions to stimulate economic activity. The goal of the stimulus is not to replace private sector activity but to revive it.
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