What term describes the government's strategy of increasing spending and cutting taxes to influence the economy?

The correct term that describes the government's strategy of increasing spending and cutting taxes to influence the economy is fiscal policy. Fiscal policy refers to the use of government spending and taxation to affect economic conditions, including levels of employment, inflation, and overall economic growth. By adjusting these financial levers, the government can stimulate economic activity during downturns or cool it down during periods of excessive growth.

Monetary policy, on the other hand, involves the management of a nation's money supply and interest rates, typically carried out by a central bank, to achieve macroeconomic objectives. Trade policy focuses on regulations and agreements that govern international trade and the exchange of goods and services between countries. Regulatory policy involves the creation and enforcement of rules and regulations to control how businesses can operate, often to protect public interests and ensure fair competition. Each of these areas plays a crucial role in economic management but serves different functions than fiscal policy.