Expansionary monetary policy is used during periods of economic slowdown to stimulate activity by increasing money supply and lowering borrowing costs. This encourages spending, investment, and employment. In contrast, contractionary monetary policy is applied when the economy shows signs of overheating or rising inflation. It reduces money supply and raises borrowing costs to slow demand. Both approaches aim to stabilize the economy but are applied under different conditions. Choosing the right approach requires careful assessment of economic indicators and potential long-term effects.