Taxing and spending policies.

• A. Civil liberties
• B. Subsidy
• C. Fiscal policy
• D. Monetary policy

Answer: (C)

Taxing and spending policies are a government’s fiscal policy. This framework uses taxation to influence how much people and businesses can spend, and government spending to affect demand and priorities in the economy. By adjusting tax rates, credits, and how the money is spent, the government can encourage growth, reduce unemployment, or curb inflation, making fiscal policy the primary tool for short- and long-run economic management.

Monetary policy operates a different lever—the money supply and interest rates—typically managed by a central bank, to influence borrowing, spending, and inflation. Civil liberties are about individual rights and protections from government action, not economic management. Subsidies are specific elements of fiscal policy (government spending aimed at supporting particular industries or activities) but do not, by themselves, describe the overarching approach to using taxes and spending to steer the economy.