What term refers to the process by which the Federal Reserve manages the money supply and interest rates?

Monetary policy is the term used to describe the actions undertaken by the Federal Reserve, the central bank of the United States, to regulate the money supply and manage interest rates in the economy. The goals of monetary policy typically include controlling inflation, fostering economic growth, and stabilizing the currency. The Federal Reserve achieves these objectives through various tools, such as open market operations, the discount rate, and reserve requirements.

In contrast, fiscal policy refers to government spending and tax policies, which are determined by Congress and the President, rather than the Federal Reserve. Exchange rate pertains to the value of one currency in relation to another, influencing trade and investment flows. Tariffs are taxes imposed on imported goods to protect domestic industries or to generate revenue for the government. By focusing on the control of the money supply and interest rates, monetary policy plays a crucial role in influencing overall economic conditions, making it the appropriate choice in this context.