Central bank of a country which formulates andimplements the monetary policy in a country.
Monetary policy is concerned with changing the supply of money stock and rate of interest which stabilizing in theeconomy.
At times of recession monetary policy increase themoney supply and lower interest rates – to stimulateaggregate demand in the country – cheap monetarypolicy.
At times of inflation/boom monetary policy reducedmoney supply and increases interest rate – adoptingtight monetary policy.
The country like India, achieving equilibrium of fullemployment – to encourage economic growth such asagriculture, industry and service sectors.