Monetary coverage in the United States contains the Federal Reserve's actions and communications to promote most employment, stable prices, and moderate long-term interest rates--the monetary desires the Congress has urged the Federal Reserve to pursue.
The Fed has historically used three equipment to behavior economic policy: reserve requirements, the discount rate, and open market operations.
There are two forms of economic policy, i.e., the contractionary and expansionary policy. The tools or measures initiated by means of the central financial institution under this policy consist of adjustments in the bargain rate, open market operations and reserve requirements.
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