Which of the following is a tool used in monetary policy?

Monetary policy involves the strategies used by central banks to control the money supply and interest rates in order to influence economic activity. Open market operations are a key tool of monetary policy, where a central bank buys or sells government securities in the market to regulate the amount of money circulating in the economy. By purchasing securities, the central bank injects liquidity into the banking system, lowering interest rates and promoting lending and investment. Conversely, selling securities withdraws money from circulation, which can help to cool off an overheated economy.

The other options mentioned are tools typically associated with fiscal policy. Setting income tax rates and government spending initiatives directly influence government budgetary actions and overall economic stimulus, while subsidizing industries is a method of direct economic intervention that influences market outcomes but is not part of monetary policy. Thus, open market operations are distinctly categorized as a tool of monetary policy, making it the correct choice.