In response to a recession, a central bank may implement __________ monetary policy to increase borrowing and spending. This approach typically involves lowering interest rates to boost aggregate demand.

In response to a recession, a central bank may implement expansionary monetary policy to encourage more borrowing and spending in the economy. This approach usually involves lowering interest rates, which makes it cheaper for individuals and businesses to take out loans. When interest rates are lower, people are more likely to borrow money to buy homes or cars, and businesses may invest in new projects or hire more workers. For example, if a central bank lowers interest rates from 5% to 2%, a family might decide to buy a new house because their monthly mortgage payments will be lower. By increasing borrowing and spending, expansionary monetary policy aims to stimulate economic growth and help the economy recover from a recession.