It includes the President , the Congress , and their appointed agencies. Only the federal government has the broad-based ability to affect economic activity in all 50 states at the same time. State governments cannot print money, have only regional influence, and possess limited fiscal powers. Most state governments are constrained by their constitutions to run balanced budgets. Monetary Policies are money supply and interest rate polices that control of the amount of money supply in circulation.
Monetary policy has two sets of tools.
The general tools , including reserve requirements, liquidity ratios, discount rates, lender of last resort facilities, and open market operations, operate pervasively throughout all markets in the economy. The selective tools , including moral suasion and interest rate, credit, foreign exchange, and margin controls, are tailored to affect specific segments of the economy. In the mid-19th century, the federal government instituted the Independent Treasury System to secure note issue control by tying note issuance to Treasury expenditures and tax collections. For the most part, however, there was no one authority to regulate the supply of money, and there certainly was no authority to regulate interest rates. Today, the U.S. monetary authority is the Federal Reserve.