What does monetary policy primarily aim to achieve?

Monetary policy primarily aims to achieve price stability and promote economic growth. Central banks utilize various tools, such as interest rates and open market operations, to influence the availability and cost of money and credit in the economy. By maintaining stable prices, monetary policy helps to preserve the purchasing power of money, which is essential for consumers and businesses to make informed financial decisions.

Furthermore, stable prices contribute to an environment conducive to investment and consumption, which in turn supports overall economic growth. When inflation is controlled, it encourages savers by ensuring that their savings retain value over time, and it helps businesses to plan for the future without the unpredictability that high inflation can bring.

In contrast to the other options, while reducing unemployment is one aspect of a broader economic goal, it is not the sole focus of monetary policy. Increasing government spending is a fiscal policy tool, not a direct objective of monetary policy, which primarily deals with money supply and interest rates. Moreover, while maintaining trade balances can be a concern for policymakers, it is not a primary goal of monetary policy. Thus, option A encapsulates the main objectives of monetary policy effectively.