What type of economic policy is used to monitor and influence a nation's economy?

Fiscal policy is the correct answer because it involves the government's use of taxation and spending to influence the economy. This policy aims to manage economic fluctuations and promote stability. By adjusting tax rates and public spending, the government can stimulate economic growth during a recession or cool down an overheating economy. This makes fiscal policy a crucial tool for managing overall economic activity, unemployment rates, and inflation.

In contrast, monetary policy focuses on controlling the money supply and interest rates and is typically managed by a nation's central bank. Regulatory policy involves the establishment of rules and regulations that govern economic activities, while trade policy refers to regulations and agreements that determine how countries trade with one another. While all these policies play important roles in the economy, fiscal policy specifically targets the economy's overall state through direct governmental actions involving taxation and government spending.