Because government policy can affect resource supplies and productivity, it can affect the growth of national output. For example, government policies that restrict the mining of coal or other minerals reduce the stock of resources available for production. Likewise, emission regulations can, in some cases, make power plants less productive. Obviously there may be good reasons to have such policies, but they can affect economic growth. Monetary policy comes into play through the working of markets.
Money allows markets to allocate economic resources over space and time.
In a market economy, exchange value is expressed in terms of prices-which, in turn, are determined by the forces of supply and demand. For example, gasoline prices usually rise around Memorial Day because that date marks the start of the summer driving season, when the public demands more gasoline from suppliers. Suppliers shift resources to respond to changes in relative prices, and productive allocation of resources requires clear signals from the price system. That's where monetary policy fits in. Good monetary policy enhances the clarity of price signals.