Share a real-life scenario where a central bank would find it necessary to implement expansionary monetary policy. How would this policy aim to stimulate the economy, and what potential benefits or risks might arise from its implementation? The COVID-19 pandemic with a major decline impacted economies worldwide due to the lockdowns and reduced spending. Central banks lowered interest rates to nearly zero to help counteract this economic decline. This made borrowing money more affordable and encouraged people to spend more which would help jumpstart the economy to avoid deflation but also came with a risk of inflation. Describe a situation where a central bank would want to implement contractionary monetary policy. How can this policy aid in curbing inflationary pressures or maintaining financial stability? Consider the potential impact on consumers, businesses, and the overall economic environment, and highlight any potential challenges or trade-offs that may arise from implementing contractionary measures. A central bank may implement contractionary monetary policy by raising interest rates to tackle high inflation. This will reduce money spending because loans are more expensive. This can help keep prices stable, but it also risks slowing economic growth and raising unemployment. Central banks must balance the need to curb inflation without harming the economy. Identify the rolls that banks play in your day-to-day life. Banks are vital in handling our daily financial