b) Monetary policy

Monetary policy, a significant economic tool, aims to control inflation and stabilize currency. Central banks, like the Federal Reserve in the U.S., manage monetary policy primarily through manipulating interest rates and controlling the money supply. Lowering interest rates can stimulate borrowing and spending, while raising rates can help cool an overheated economy. Monetary policy is crucial for maintaining economic stability, influencing everything from inflation rates to employment levels. It plays a key role in a government’s economic strategy, working alongside fiscal policy to manage economic cycles and ensure long-term growth.