Imagine that you are on the roof of your house and suddenly you see a helicopter showering notes. Economists also call this hypothetical situation helicopter money or monetary helicopter.
In the midst of economic crisis, when the expenditure of the common people is reduced, then the government promotes the spending and consumption of the people by distributing free money. Due to increase in the expenditure of common people in the country, demand increases and the economy improves. This money is called helicopter money.
Helicopter money is untraditional tool of monetary policy.
through which brought the economy back on track.
Under this, money is printed on a large scale and it is brought to the common people.
The term was first used by American economist Milton Friedman. Friedman said about this that by suddenly increasing the money in the economy, it will get rid of the slowdown and the growth will accelerate.
Under such a policy, the central bank increases the supply of money through the government and new cash are inflicted on the people. This increases the demand for the products and also increases the inflation.
When is it used
Helicopter money is used by any government when the economic crisis in the country is at its peak. There has been an economic slowdown in the country.
Purpose of Helicopter Money
Efforts to increase expenses :- The government prints notes on a large scale to save the falling economy and appeals to the public to shop when there is more availability of cash in the market. The government should send money directly to the account of the people so that the expenditure of the people will be increased.
Increase to Economic activities: - Government uses helicopter money during an economic crisis. Through this money is sent directly to the account of common people. The motive behind this is that people's expenditure will increase if they have money. If we increase our expenditure, the demand will increase and the economy will get stronger.
Increase Demand: - The purpose of the government through Helicopter Money would have been to increase the demand of customers in the market. As the demand of customers will increase, the economy of the country will also get stronger and the country will come out of the economic crisis.
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