Explanation:

Cheap money policy is a monetary policy under which RBI increases the money supply to make loans and advances cheaper by lowering the interest rates. It is adopted to give a push to economic activities in the economy during a slowdown.Such a policy is used by the government at the time of deflation or recession in the economy in order to reverse depression from the economy as such a policy increases the purchasing power of the people by increasing the money supply in the economy. Hence option 2nd is correct.