1. Adjust the interest rate policy

Reduce the interest rate of the central bank, thus reducing the deposit and loan interest rate of commercial banks. This policy will encourage enterprises to lend, which will be converted into investment or capital flow, that is, consumption. This policy can also reduce the risk of deflation. Economists are very afraid of deflation, because it will bring economic recession, and when interest rates rise to a certain extent, it will lead to insufficient market liquidity. When deflation comes, people tend to reduce consumption, because deflation is characterized by lower prices, so we can save money by controlling current consumption. However, lowering interest rates will increase the risk of inflation or excess liquidity.

2. Tax policy

Reduce the personal or corporate tax rate. This measure, like interest rate cuts, will promote enterprise investment and personal consumption. The increase of personal consumption can promote the development of the company by creating demand. But the danger of doing so is to increase the fiscal deficit. But it is not inevitable to increase the fiscal deficit, because the tax rate has decreased, but the economy has grown and the tax base has expanded. Just look at their relationship.

3. Fiscal policy

Increase national financial expenditure. This measure will create jobs, demand and sometimes attract investment. First of all, government expenditure itself is an investment project, which creates employment and demand for other industries, and these practitioners create new demand. By analogy, in theory, it can create economic growth several times that of government investment itself. Compared with the interest rate policy, this policy also has the following advantages: when the interest rate is raised, people will use the extra money for deposits instead of consumption or investment; When increasing fiscal expenditure, we make sure that most of the increased income will be converted into consumption to meet the basic needs of practitioners. In addition, people must have enough savings to cope with the economic crisis, and the specific amount varies according to the specific economic situation and social security situation of the country. The disadvantage of this policy is that it enlarges the fiscal deficit, and its efficiency is often questioned because the purpose of public investment must be clear.

4. Exchange rate policy

Reduce the exchange rate of domestic currency (low exchange rate policy, exchange rate, support and opposition to low exchange rate policy, how the central bank adjusts the exchange rate of domestic currency). This policy will increase exports because the prices of domestic goods will become cheaper in the international market. The increase in exports will enable producers to increase investment and create employment opportunities, thus increasing consumption. The disadvantage is that the domestic and international prices are ultimately determined by the manufacturers. If manufacturers raise prices at the same time, it will not play a corresponding role, and the prices of imported goods will become very high accordingly. Long-term implementation of low exchange rate policy will lead to inflation.