What is meant by the term "monetary policy"?

The term "monetary policy" refers specifically to the actions taken by a country's central bank to control the supply of money and interest rates in the economy. This involves regulating the amount of money circulating in the economy, which is a key tool for influencing economic activity, inflation, and employment levels. By adjusting the money supply, the central bank can impact borrowing costs, consumer spending, and investment decisions, ultimately aiming to achieve stable economic growth and control inflation.

In contrast, government fiscal operations involve decisions on taxation and government spending but fall under fiscal policy rather than monetary policy. Consequently, the other options refer to aspects that are not directly related to how a central bank manages money supply and interest rates, which distinguishes monetary policy as a distinct field of economic management.