Government’s chosen economic strategy, deciding to increase or decrease the country’s money supply. A monetary policy is typically applied through the central bank . Three major tools are: (1) buying or selling national debt , (2) changing credit restrictions , and (3) changing interest rates and reserve requirements . In control of the aggregate demand it plays the dominant role over, by extension, of economic inflation. Also known as monetary regime. Also refer to monetarism.
Black’s Law Online Dictionary
