Countercyclical monetary policy refers to the approach taken by central banks to adjust the money supply and interest rates in order to counteract economic fluctuations. This policy aims to stimulate the economy during periods of recession by lowering interest rates and increasing money supply, while raising rates and reducing supply during periods of economic expansion to prevent overheating. This balancing act helps maintain economic stability and avoid severe booms and busts.
congrats on reading the definition of countercyclical monetary policy. now let's actually learn it.