What are the two kinds of monetary policy?

The two kinds of monetary policy are expansionary and contractionary. The monetary policy implemented with the objective of reducing the circulation of money throughout the economy is known as a contractionary kind of monetary policy. You can read about the Monetary Policy – Objectives, Role, Instruments  in the given link.

Expansionary monetary policy is used when there is recession or economic slowdown.

Further readings:

  1. Monetary Policy Committee (MPC) – Structure, Objectives UPSC Notes
  2. Monetary System – Types of Monetary System 

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