Economic Stimulus


DEFINITION of 'Economic Stimulus'

Attempts by governments or government agencies to financially stimulate an economy. An economic stimulus is the use of monetary or fiscal policy changes to kick start a lagging or struggling economy. Governments can use tactics such as lowering interest rates, increasing government spending and quantitative easing, to name a few, to accomplish this.


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BREAKING DOWN 'Economic Stimulus'

The term economic stimulus became an everyday economic term following the recession created by the 2008-2009 Credit Crisis, which caused most, if not all, of the world's nations to slow, with many entering recessions and some depressions. Governments in many cases took unprecedented measures to stimulate lame economies through numerous economic measures.

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  1. What happens if interest rates increase too quickly?

    When interest rates increase too quickly, it can cause a chain reaction that affects the domestic economy as well as the ... Read Full Answer >>
  2. What are some common examples of demand shock?

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  3. How did the financial crisis affect the oil and gas sector?

    The financial crisis had a negative impact on the oil and gas sector as it led to a steep decline in oil and gas prices and ... Read Full Answer >>
  4. How can a change in fiscal policy have a multiplier effect on the economy?

    A change in fiscal policy has a multiplier effect on the economy because fiscal policy affects spending, consumption and ... Read Full Answer >>
  5. If oil producers run out of room to store oil, will the price of gasoline plummet?

    The price of gasoline would plummet if oil producers run out of room to store oil. However, running out of room to store ... Read Full Answer >>
  6. How does expansionary economic policy impact the stock market?

    Expansionary economic policy leads to increases in the stock market because it generates increased economic activity. Policymakers ... Read Full Answer >>
  7. Which United States Presidents have run the largest budget deficits?

    While most U.S. presidents over the past 75 years have run budget deficits for many if not all of their years in office, ... Read Full Answer >>
  8. How can quantitative easing be effective in the economy?

    It is incredibly difficult to determine whether any economic policy is effective. If the plan's policy prescriptions and ... Read Full Answer >>

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