Which type of policy is created and implemented by the federal government to influence economic growth?

Fiscal policy refers to the strategies employed by the federal government to manage the economy through spending and taxation. By adjusting tax rates and government spending levels, fiscal policy aims to stimulate economic growth or curtail inflation. For instance, during a recession, a government might increase its spending on infrastructure projects, which in turn creates jobs and encourages consumer spending. Conversely, during periods of high inflation, the government may choose to reduce spending or increase taxes to cool down economic activity.

In contrast, monetary policy involves the management of money supply and interest rates by a country's central bank, primarily focusing on controlling inflation and stabilizing the currency. Trade policy pertains to the regulations and agreements that govern international trade, which can affect the economy but does not directly influence domestic economic growth in the same way as fiscal policy. Regulatory policy involves rules imposed on businesses to protect the public interest but again does not directly target economic growth. Thus, fiscal policy is the most relevant choice when discussing measures the federal government takes to influence economic growth directly.