AP U.S. Government 2.1 Public Policy

we often talk about the demand for goods and the

supply of goods That's all you're ever gonna remember from

your high school of course in terms of demand well

we have want here or demands to buy things like

let's say pizza if all of a sudden there's a

crazy new diet fad claiming that pizza is the miracle

health food we'll demand for pizza would go up if

there's a report claiming pizza was the number one cause

of food related deaths while demand would probably go down

then we've got restaurants and food companies who then supply

those pizzas to us If cheese suddenly became way cheaper

production costs would go down and the supply would likely

increase if government decided to increase taxes on pizza manufacturers

well they'd have less money to spend on producing the

pizzas though the supply would decrease the same idea could

be applied to the political economy governments can either try

to help the economy by increasing demand or they can

try to improve things by increasing supply That last one

is what we mean when we say supply side economics

thinking according to supply side economics should a supply never

exceed demand Well actually supply side economics is all about

getting businesses toe produced maur If supply were to increase

and demand stayed the same we'd simply see an increase

in quantity and a decrease in price That's what supply

side economists are going for a new supply side economists

think be government stimulus efforts should aim it increasing consumption

in order to soak up excess supply Well remember how

we said that governments could help the economy by increasing

demand Well that's what government stimulus efforts are designed to

dio by increasing government spending lawmakers put more cash money

in the pockets of consumers which can increase demand in

the market place they'll be isn't really supplying us with

the right stuff would supply side economists argue that dee

the government should not intervene in the economy Well those

supply side economist tend to fall on the conservative side

of the political spectrum they aren't arguing for a complete

ban on government intervention It's more about using a different

set of tools What about e that suppliers of natural

resource is should increase their conservation efforts What on earth

are they talking about here it's the economy not environmental

law which means that supply side economists believe see government

stimulus should aim it expanding production by reducing taxes on

businesses Plaza supply side is really just a fancy name

for low tax economics The idea is that reducing taxes

especially on businesses and the wealthy would incentivize investment in

production which would boost supply in the marketplace So c

is the right answer though There's A lot of disagreement

in washington over whether or not supply side economics actually

produces its intended effect It's pretty easy to graph the

connection between tax policy discussions and overall sleeping Uh yeah