Expansionary monetary policy would be the most effective to bring economy back to the long-run equilibrium.
A nation's monetary authority implements a strategy known as monetary policy in order to maintain price stability and public trust in the value and stability of the nation's currency. The goal of this strategy is to regulate either the money supply or the interest rate applied to extremely short-term borrowing. As tools for a government to manage economic cycle events like recessions, fiscal policy, in contrast, concentrates on taxation, government spending, and borrowing. With the aid of monetary economics, the optimum monetary policy may be developed. Monetary policy and fiscal policy are typically developed independently in modern nations. It is said that monetary policy is either expansionary or contractionary.
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