Question

Helicopter money Is it still a theory?

Answer 1

Yes,Helicopter moneymoney is still a theory. Its practical application has not been seen yet. Every coin has two faces. similarly, helicopter money has its own advantages and disadvantages which are stated below. It is because of these disadvantages that this concept is not used Practically.

Helicopter money refers to the large sum of money that is printed and distributed among the public ecofor thethe purpose of boosting the economy during a recession or when interest rates fall to zero. It is also referred to as a helicopter drop, because under this method a helicopter is used to scatter supplies from the sky.

Advantage and disadvantage of Helicopter supply-

Advantages-

1 ) Helicopter money does not depends on increased borrowing to fuel the economy, as a result it doesn’t create more debt and interest rates remains unchanged.

2) Helicopter money boosts spending and economic growth more effectively than quantitative easing because it increases the demand for goods and services immediately.

Disadvantages-

1) Helicopter money as a tactic is not reversible and it’s not a feasible solution to revive the economy.

2) One of the main risks associated with helicopter money is that it can lead to a devaluation of the currency on the foreign exchange market orebecause more money is printed and supply increases, as a result of which the value of the domestic currency could significantly decrease.

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