By definition, monetary policy is usually a process of regulating the outflow and inflow of currency inside a state so as to avoid economic deficiencies. A government usually establish a central bank to control and oversee monetary operations. On the other hand, the delay of monetary policy is usually called the inside lag.
Monetary policy or financial policy is a branch of economic policy that uses the amount of money as a variable to control and maintain economic stability. It includes the decisions of the monetary authorities referring to the money market, which modify the amount of money or the interest rate. When applied to increase the amount of money, it is called an expansive monetary policy-quantitative expansion-and when applied to reduce it, a restrictive monetary policy.
