Stimulus package

Stimulus Package may refer to:

• government spending meant as an economic stimulus as part of a fiscal policy
• The Stimulus Package, album from rapper Freeway
• Economic Stimulus Act of 2008
• American Recovery and Reinvestment Act of 2009
• Stimulus map pack, downloadable content for the video game Call of Duty: Modern Warfare 2

The stimulus package is a package of the government

• Economic Stimulus Package of Botswana

See also

• Category:Economic stimulus programs
• Stimulus (disambiguation)

Stimulus package is a package of tax rebates and incentives used by the governments of various countries to stimulate economy and save their country from a financial crisis. The idea behind a stimulus package is to provide tax rebates and boost spending, as spending increases demand, which leads to an increase in employment rate which in turn increases income and hence boosts spending. This cycle continues until the economy recovers from collapse. One such stimulus package was used by the United States in 2008 during the time of the global recession, which was aimed at increasing employment and recovery of the US economy. India too used its first stimulus package in 2008 to ensure the safety of bank deposits and stability of the financial system. The government took necessary steps to infuse liquidity into the banking system. In an effort to infuse liquidity into the banking system, RBI reduced the CRR as well as repo and reverse repo rates. Also, the problems faced by non-banking financing companies were addressed. These measures were taken by the government to counter the impact of global recession and stimulate the Indian economy. A stimulus package is a package of economic measures put together by a government to stimulate a floundering economy. The objective of a stimulus package is to reinvigorate the economy and prevent or reverse a recession by boosting employment and spending. The theory behind the usefulness of a stimulus package is rooted in Keynesian economics, which argues that the impact of a recession can be lessened with increased government spending. A stimulus package is a number of incentives and tax rebates offered by a government to boost spending in a bid to pull a country out of a recession or to prevent an economic slowdown. A stimulus package can either be in the form of a monetary stimulus or a fiscal stimulus. A monetary stimulus involves cutting interest rates to stimulate the economy. When interest rates are cut, there is more incentive for people to borrow as the cost of borrowing is reduced. An increase in borrowing means there’ll be more money in circulation, less incentive to save, and more incentive to spend. Lowering interest rates could also weaken the exchange rate of a country, thereby leading to a boost in exports. When exports are increased, more money enters the economy, encouraging spending and stirring up the economy.

Economic stimulus consists of attempts by governments or government agencies to financially stimulate an economy. An economic stimulus is the use of monetary or fiscal policy changes to kickstart growth during a recession. Governments can accomplish this by using tactics such as lowering interest rates, increasing government spending and quantitative easing, to name a few. Over the course of a normal business cycle, governments may try to influence the pace and composition of economic growth using various tools at their disposal. Central governments, including the U.S. federal government, may utilize fiscal and monetary policy tools to stimulate growth. Similarly, state and local governments can also engage in stimulus spending by initiating projects or enacting policies that encourage private sector investment. Like many things in economics, stimulus programs are somewhat controversial. John Maynard Keynes, a British economist from the early 20th century, is most often associated with the concept of economic stimulus, sometimes referred to as counter-cyclical measures. His general theory argued that during times of persistently high unemployment, governments ought to deficit spend in an effort to stimulate further demand, elevate growth rates, and reduce unemployment. In stimulating growth, deficit spending could, in some circumstances, pay for itself through higher tax revenues resulting from faster growth.