What do we call the taxing and spending policies set by a government?

Fiscal policy refers to the government's approach to managing its revenue and expenditures to influence the economy. This encompasses decisions regarding taxation and government spending. For instance, when a government increases spending on public services or infrastructure, it can stimulate economic growth by creating jobs and boosting demand. Conversely, raising taxes can be used to decrease spending within an economy by putting less money in consumers' hands.

In contrast, monetary policy pertains to how a government manages its currency supply and interest rates, primarily executed by a nation’s central bank. Trade policy relates to regulations and agreements that determine how a country conducts trade with other nations, impacting tariffs and trade agreements. Regulatory policy involves rules and guidelines set by governmental agencies that manage compliance related to various sectors.

The distinction between these policies is critical for understanding how governments influence economic activities and address financial issues within the economy. Thus, it is clear that fiscal policy is specifically concerned with taxation and spending, making it the accurate choice.