What does the term 'monetary policy' refer to?

The term 'monetary policy' specifically refers to the management of interest rates and the money supply by a country's central bank or similar financial authority. This policy is vital in influencing economic conditions such as inflation, employment, and the overall level of economic activity. Through various tools, including open market operations, discount rates, and reserve requirements, the central bank can adjust the amount of money circulating in the economy and alter interest rates, which can stimulate or slow down economic growth.

In contrast, the other options focus on different aspects of economic policy. Regulation of government spending pertains to fiscal policy, which deals with government expenditures and tax policies. Trade tariffs are measures imposed on imported goods to protect domestic industries and do not fall under monetary policy. Finally, while there is a connection between monetary policy and fiscal policy, control of fiscal policy itself is not a function of monetary policy, as fiscal policy primarily involves government revenue and spending decisions made by the legislative branch.