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The ‘Interest Rate Policy’ is a component of
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- Fiscal Policy
- Monetary Policy
- Trade Policy
- Direct Control
- Fiscal Policy
Correct Option: B
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. The contraction of the monetary supply can be achieved indirectly by increasing the nominal interest rates. Monetary authorities in different nations have differing levels of control of economy-wide interest rates.