Which policy involves government intervention through taxation and spending?

The correct answer is fiscal policy because it specifically refers to the government's use of taxation and spending to influence the economy. Fiscal policy aims to manage economic fluctuations by adjusting the levels of government spending and taxation. For example, during a recession, the government might increase spending or cut taxes to stimulate economic activity. Conversely, during times of economic growth, the government might decrease spending or raise taxes to cool down the economy.

Monetary policy focuses on controlling the supply of money and interest rates, typically managed by a country's central bank, rather than directly involving taxation and spending decisions. Trade policy deals with regulations and agreements that govern international trade and does not primarily concern itself with fiscal measures like taxation or government spending. Economic policy is a broader term that encompasses both fiscal and monetary policies, but it does not specifically refer to the intervention through taxation and spending. Thus, fiscal policy is the precise choice that highlights government intervention through these means.