How is "monetary policy" defined?

Monetary policy is defined as the management of money supply and interest rates by a central bank. This definition encompasses the tools and strategies used by central banks—such as setting interest rates, open market operations, and reserve requirements—to control inflation, stabilize the currency, and foster economic growth. By adjusting the money supply and influencing interest rates, central banks can affect overall economic activity, including consumer spending and business investment.

In contrast, other options pertain to different areas of economic policy. Fiscal spending and taxation policies relate specifically to government budgeting and revenue collection, which are under the purview of fiscal policy rather than monetary policy. Investment strategies utilized by corporations focus on how businesses allocate their capital, which is distinct from the functions of a central bank. Hence, the definition that aligns directly with the role of monetary authorities is the management of money supply and interest rates.