Which of the following accurately describes fiscal policy?

The accurate description of fiscal policy is government spending and taxation that influences the economy. Fiscal policy primarily involves the use of governmental revenue collection (taxation) and expenditure (spending) to monitor and influence a nation's economy. Through adjustments in tax rates and public spending levels, the government aims to achieve macroeconomic objectives such as controlling inflation, fostering economic growth, and reducing unemployment.

When the government increases spending or decreases taxes, it generally stimulates economic activity. Conversely, decreasing spending or increasing taxes can cool down an overheated economy. This direct manipulation of aggregate demand distinguishes fiscal policy from monetary policy, which focuses on managing the money supply and interest rates.

Other concepts listed—such as monitoring bank interest rates, controlling the money supply, and assessing the effectiveness of financial services—are typically associated with monetary policy or financial regulation, rather than fiscal policy. Thus, the clear focus on government expenditure and taxation makes this option the correct choice regarding fiscal policy.