Basic purpose of this article is to Define and Discuss on Monetary Policy. Monetary policy is conducted by a nation’s central bank. Inside U. S., monetary policy is carried out by the Fed. The Fed has three main instruments who’s uses to conduct fiscal policy: open market procedures, changes in reserve demands, and changes in this discount rate. The discount rate would be the interest rate the Fed charges banks that need to borrow reserves in order to meet reserve requirements. Here also focus on Expansionary and contractionary monetary policy, Keynesian view of monetary policy.