Answer:
Monetary policy refers to the actions a government takes to control the money supply and achieve steady and sustainable economic growth.
Step-by-step explanation:
Monetary policy refers to the central bank's activities of regulating the money supply to achieve desired macroeconomic objectives. The government aims at steady and sustainable economic growth. The central bank analyzes economic data information from various government agencies to understand the state of the economy. The bank then applies suitable monetary policies to influence the direction of the economy.
Monetary policies are categorized as expansionary or contractionary. Expansionary monetary policies are used during recessions to stimulate economic growth and create employment. Contractionary monetary policies apply in curbing inflation and moderating the growth rate.