Which policy utilizes government taxing and spending to stabilize the economy?

The correct choice is fiscal policy because it specifically refers to the use of government taxing and spending as tools to influence the economy. When a government adjusts its expenditure levels and tax rates, it can either stimulate economic growth or cool down an overheating economy. For instance, during a recession, increased government spending and tax cuts can boost demand, leading to higher employment and production levels. Conversely, during periods of high inflation, reducing spending or increasing taxes can help to stabilize prices.

Monetary policy, on the other hand, involves the management of a nation's money supply and interest rates, typically performed by a central bank. Trade policy focuses on the regulation of international trade and tariffs, while supply-side policy aims at increasing production and the supply of goods through tax cuts and deregulation. Each of these policies has its own mechanisms and objectives but does not directly involve the government’s role in managing its fiscal revenue and expenditures like fiscal policy does.