Which of the following best defines monetary policy?

Monetary policy is best defined as the control of the money supply and interest rates, which is typically managed by a country's central bank. The primary goal of monetary policy is to influence economic activity, stabilize prices, and achieve full employment. By adjusting the money supply, the central bank can either stimulate the economy by lowering interest rates, which encourages borrowing and spending, or cool the economy by raising interest rates to curb inflation. This pivotal role in managing economic conditions makes the control of money supply and interest rates a fundamental aspect of monetary policy.

In contrast, the management of fiscal budgets pertains to government spending and taxation, which falls under fiscal policy, not monetary policy. The regulation of natural resources typically deals with environmental concerns or resource management rather than directly influencing the economy through money supply. Similarly, the adjustment of trade tariffs relates to international trade policy and does not encompass the core functions of monetary policy, which focuses specifically on monetary factors impacting the economy.