With reference to Helicopter Money consider following statements It involves the use of pr...........

Economic Affairs Money Supply and Monetary Policy

With reference to Helicopter Money, consider following statements

It involves the use of printed money by central banks to buy government bonds
It aims at putting more money into the pockets of people to nudge them to spend more money and in turn pick-up economic activity in the country.

Select the correct statement.

1 only

2 only

Both

None

By defination Helicopter Money is a monetary policy tool for Quantitative Easing (QE), which aims at "unexpectedly dumping money onto a struggling economy with the intention to shock it out of a deep slump.”
But the working of QE is through the banking system whereas Helicopter money works directly by stimulating demand from the people. Hence statement 1st is incorrect.
This is an unconventional monetary policy tool aimed at bringing a flagging economy back on track.
The policy aims at putting more money into the pockets of people to nudge them to spend more money and in turn pick-up economic activity in the country.

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