When there is fall in consumer & business demand the government eases the credit market conditions, purchases government securities lowers the reserve requirements which leads to an upward shift in the AD.
Restrictive monetary policy
It is designed to curtail AD in times of inflationary trends
Fiscal policy means
The use of taxation and public expenditure by the government for stabilization or growth.
By fiscal policy is meant government actions affecting its receipts and expenditures which are ordinarily taken as measured by the government’s receipts, its surplus or deficit .
Instruments of fiscal policy
A situation in which the government is borrowing heavily while businesses and individuals also want to borrow.
The former can always pay the market interest rate, but the latter cannot, and is crowded out.
Crowding out is any reduction in private consumption or investment that occurs because of an increase in government spending. If the increase in government spending is not accompanied by a tax increase, government borrowing to finance the increased government spending would increase interest rates, leading to a reduction in private investment