The Economic Theories Of Supply Side Economics - 1485 Words

Supply-side economics is better known as Reaganomics, or the trickle-down economic policy. It is an economic philosophy that conveys the notion greater tax cuts for investors and entrepreneurs provide incentives to save and invest. This economic theory goes further to suggest that in turn, there are economic benefits which will trickle down into the overall economy. The key to answering whether supply side was successful is grounded in a sound understanding of what it is. Like most economic theories, supply-side economics attempts to explain both the macroeconomic phenomena and in turn, offer policy prescriptions for steady economic growth. In general, supply-side theory has three pillars: tax policy, regulatory policy and monetary policy. However, trickle-down economics can be reflected in a single idea. Behind all three of the aforementioned pillars is the assumption that production is the most important factor in determining economic growth. Typically, this theory is held in stark contrast to the Keynesian theory which, among other facets, includes the idea that demand can waver. The big distinction between the two economic perspectives is that a pure Keynesian believes that consumers and their demand for goods and services are key economic drivers. A supply-sider, in contrast believes that producers and their willingness to create goods and services set the pace of economic growth. The Argument That Supply Creates Its Own Demand Supply-side economics stakes theShow MoreRelatedKeynesian Theory vs. Supply Side Essay example869 Words   |  4 Pagesvery important economic policies that point in different directions of fiscal policy include the Keynesian economics and Supply Side economics. They are opposites on the economic policy field and were introduced in the 20th century, but are known for their influence on the economy in the United States both were being used to try and help the economy during the Great Depression. John Maynard Keynes a British economist was the founder of Keynesian economic theory. Keynesian economics is a form of demandRead MoreEconomic Policies And Economic Policy1096 Words   |  5 Pageslook at is economic policy. Economic policy refer to actions the government makes in the economic field. For example the taxation, the government supply, money supply, interest rates, along with the labor market, and national ownership. Inside the economic policy you will find all sorts of things that help make the policy stand on it s two feet. The three main parts that tie into economic policy are supply-side economics, demand-side economics, and monetary policy. Each of the three economic structuresRead MoreEconomic Policies And Economic Policy1096 Words   |  5 Pageslook at is economic policy. Economic policy refer to actions the government makes in the economic field. For example the taxation, the government supply, money supply, interest rates, along with the labor market, and nat ional ownership. Inside the economic policy you will find all sorts of things that help make the policy stand on it s two feet. The three main parts that tie into economic policy are supply-side economics, demand-side economics, and monetary policy. Each of the three economic structuresRead MoreSupply Side Economics : Economic Policy804 Words   |  4 Pageswonder what economic policy is? Economic policy is actions that the government takes to influence the economy in different types of ways, or policies. The actions the government takes can include setting interest rates through the federal reserve, who handles all the money in currency. The government can also regulate how much money they use on different expenditures. The government also uses economic policy when they set tax rates. The types of policies are supply-side economics, demand-side economicsRead MoreRiverpoint Writer (Article Aalysis)1617 Words   |  7 PagesIn understanding economics first summarize what is econo mics. No universally definition of economics. Although it defined as the study of how individuals and groups make decisions with limited resources, coordinate their wants and desires, given the decision mechanisms, social custom, and political realities of the society. Economic are operative in aspect of lives, market forces of goods sold in a market but supply and demand also used to analyzes situation in which economic forces operate.Read MoreThe Theory Of The Classical School1694 Words   |  7 Pages The classical school is one of the economic thoughts; the key assumption of this school is that the market system is the most efficient system in the sense that the unencumbered market mechanism ensures the optimal allocation and utilisation of scarce resources. They also believed that â€Å"Supply creates its own demand.† (The early debate on policy atavism) In other words, in the process of producing output, businesses would also create enough income to ensure that all of the output will be sold.Read MoreThe Theory Of Keynesian Economics916 Words   |  4 Pagesâ€Å"classical theory had difficulty in explaining why the depression kept getting worse† (Cheung, n.d., para. 1). Many economists have attempted to develop theories that help to explain changing circumstances and why things kept getting worse. John Maynard Keynes, a British economist also known as the founder of macroeconomics, saw this as an opportunity and began to develop alternative ideas. His alterna tive ideas led to the idea of Keynesian economics. What is Keynesian Economics? KeynesianRead MoreClassical Vs Keynesian Economics1235 Words   |  5 Pagesand Keynesian economics are both accepted schools of thought in economics, but each had a different approach to defining economics. The Classical economic theory was developed by Adam Smith while Keynesian theory was developed by John Maynard Keynes. Similarities: One of the most surprising similarities between the two theories is that John Keynes developed his theory based on the Adam Smith’s theory. Keynes did not entirely disagree with Adam Smith but rather, expanded the theory based on the GreatRead MorePolicy Review And The Lucas Criticisms Essay919 Words   |  4 PagesPolicy Review and the Lucas Critiques Orthodox Keynesian economists believe that the change of the money supply will lead to the change of effective demand, and further result in the change of the economy. However, in the monetary economy cycle theories, the expected monetary supply changes will not influence the total economy; the unexpected money supply changes will impact the total economic in short term. In the long term, it merely impacts the changes of general price levels, instead of on theRead MoreThe Economic Policies Of Supply Side Economics1150 Words   |  5 Pageslies within a nation’s economic policy. Economic policy is the actions taken by a government to influence its economy. Types of economic policy actions can include setting interest rates through a federal reserve, regulating the level of government expenditures, creating private property rights, and setting tax rates. Economic policy hopes to accomplish economic growth and a stable economy. More specifically, the federal government hopes to accomplish stable prices, economic growth, and full employment