Which of the following describes monetary policy?

Monetary policy refers to the actions taken by a country's central bank, in the United States' case, the Federal Reserve Bank (FRB), to manage the economy by controlling the money supply and interest rates. By adjusting the money supply, the FRB aims to influence overall economic activity, stabilize prices, and manage inflation. This can include strategies like lowering interest rates to encourage borrowing and spending or raising rates to help cool an overheated economy.

The other options represent different concepts. Government intervention in tax policy reflects fiscal policy, which is separate from monetary policy as it deals with taxation and government spending decisions. Direct spending by Congress is also fiscal policy, not related to the monetary control exerted by the FRB. Lastly, manipulation of interest rates through taxation incorrectly conflates interest rate adjustments, which are a tool of monetary policy, with taxation, which falls under fiscal policy. Thus, the choice that accurately describes monetary policy is the one that speaks to the adjustments made by the FRB regarding the money supply.