Economic stabilization refers to the measures taken by governments or central banks to maintain steady economic growth and control inflation. This often involves adjusting monetary policy, such as changing interest rates, or implementing fiscal policies, like altering government spending and taxation. The goal is to prevent extreme fluctuations in the economy, which can lead to recessions or booms. One common tool for economic stabilization is the use of monetary policy by central banks, such as the Federal Reserve in the United States. By influencing the money supply and interest rates, these institutions aim to create a balanced economic environment that supports employment and sustainable growth while keeping inflation in check.