A government's course of action is usually called a policy. While policy is a blanket term for almost anything that the government may do, there are different types of government policies. Regardless of the type of policy, all affect the people that the government was created to help protect and serve.
Policy is defined as a definite course of method of action selected from among alternatives and in light of given conditions to guide and determine present and future actions. Generally speaking, this means that any decision made by a government for how to act is considered to be government policy.
Foreign policy is the policy of behavior between one sovereign state and other sovereign states. A good example of this is the ban that was put on trade between the United States and Cuba. This trade embargo was a form of foreign policy.
Government policy that reflects the rules and regulations for how the economy will operate is referred to as economic policy. Introducing the gold standard and eliminating the silver standard was one form of economic policy. More recently, the economic stimulus package of 2009 was a one-time economic policy.
Criminal Justice Policy
When a government sets rules for criminal behavior--including which actions are deemed criminal, their possible punishments and other details--it's creating criminal justice policy. This area of policy is often changing, with certain actions being de-criminalized, such as smoking marijuana in some parts of the country, and new actions making their way into the criminal code every day. This type of policy can also be altered by the courts by creating a precedent, or by the Supreme Court declaring a policy unconstitutional through judicial review.
These types of policy are far from the entirety of the varieties of government policy. There is also a lot of overlap between policies. For instance, it's a regulatory policy that a person has to drive the speed limit, and the imposition of a fine can be seen as both an economic and a criminal justice policy. Additionally, it's important to remember that if a government actively chooses to do nothing, that is in and of itself a policy decision. The policy just happens to be not taking any action.