A government's monetary policy is its plan to control the money supply.

Correct option

  • The correct completion of the sentence
    “A government's monetary policy is its plan to control taxation and spending. prices. workers' wages. the money supply.”
    is: “the money supply.”

Why this is the answer

  • Monetary policy deals with:
    • The money supply in the economy
    • Interest rates and credit conditions
    • Inflation and overall price stability
  • Taxation and government spending belong to fiscal policy, not monetary policy.

Quick contrast: monetary vs fiscal

  • Monetary policy :
    • Run mainly by a central bank
    • Controls money supply and interest rates
  • Fiscal policy :
    • Run by the government
    • Changes in taxes and government spending

TL;DR: Among the choices given, “the money supply” is the one that correctly defines what monetary policy controls.

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