Question: Consider the following statement:
- ‘Helicopter money’is an unconventional monetary policy tool aimed at bringing a flagging economy back on track.
- American economist Milton Friedman coined this term.
Choose the correct one:
(a) Only(1)
(b) Only(2)
(c) Both (1) and (2)
(d) None of the above
Answer:(c)
Related facts:
Context:
- With no quick escape in sight for Covid-ravaged economies, authorities the world over are going back to the drawing board to find strategies to deal with this nightmare.One such strategy doing the rounds is ‘helicopter money’.
- Telangana Chief Minister K. Chandrashekar Rao has also suggested RBI to adopt the concept of Helicopter Money to help state governments tide over the current crisis and kickstart economic activity in India.
‘Helicopter money’:
- This is an unconventional monetary policy tool aimed at bringing a flagging economy back on track.
- It involves printing large sums of money and distributing it to the public.
- American economist Milton Friedman coined this term.
- It basically denotes a helicopter dropping money from the sky.
- Friedman used the term to signify “unexpectedly dumping money onto a struggling economy with the intention to shock it out of a deep slump.
- ” Under such a policy, a central bank “directly increase the money supply and, via the government, distribute the new cash to the population with the aim of boosting demand and inflation.”
Links:
https://economictimes.indiatimes.com/news/et-explains/what-is-helicopter-money-and-why-is-it-in-news/articleshow/75106564.cms
https://thewire.in/media/kannada-news-channel-helicopter-money-india
https://www.ig.com/en/glossary-trading-terms/helicopter-money-definition