Solutions to Change

By S Aswathi Mohan, (Image source: The Economic Times) Monetary Policy is a tool used by a nation’s Central Bank to influence the nation’s price levels, output, etc as a response to global shocks. Global warming is the rise of the average temperature of the Earth due to the emission of greenhouse gases like carbon dioxide, while recession is a period of economic slowdown characterised by low consumption and reduced trade and industrial activity. So how are they related to each other? The answer is economic shocks. Economic Shocks An economic shock is an event that brings about a significant change in the economy. It can either affect the aggregate demand or aggregate supply of an economy. Negative economic shocks affect the economy by causing a reduction in the output and hence employment of the economy, leading the economy to a recession stage. Global Warming-Shock Relation Global warming is responsible for many drastic changes in the climate. It causes dro...