AP U.S. Government 2.1 Public Policy

AP U.S. Government: Public Policy Drill 2, Problem 1. According to supply-side economics...what?

AP U.S. GovernmentPublic Policy
LanguageEnglish Language
Public PolicyPolicymaking

Transcript

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we often talk about the demand for goods and the

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

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your high school of course in terms of demand well

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we have want here or demands to buy things like

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

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crazy new diet fad claiming that pizza is the miracle

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

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

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of food related deaths while demand would probably go down

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

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those pizzas to us If cheese suddenly became way cheaper

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production costs would go down and the supply would likely

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increase if government decided to increase taxes on pizza manufacturers

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

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pizzas though the supply would decrease the same idea could

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be applied to the political economy governments can either try

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to help the economy by increasing demand or they can

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try to improve things by increasing supply That last one

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is what we mean when we say supply side economics

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thinking according to supply side economics should a supply never

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exceed demand Well actually supply side economics is all about

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getting businesses toe produced maur If supply were to increase

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

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

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side economists are going for a new supply side economists

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think be government stimulus efforts should aim it increasing consumption

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in order to soak up excess supply Well remember how

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we said that governments could help the economy by increasing

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

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dio by increasing government spending lawmakers put more cash money

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in the pockets of consumers which can increase demand in

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

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the right stuff would supply side economists argue that dee

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the government should not intervene in the economy Well those

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supply side economist tend to fall on the conservative side

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

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

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set of tools What about e that suppliers of natural

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resource is should increase their conservation efforts What on earth

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

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law which means that supply side economists believe see government

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stimulus should aim it expanding production by reducing taxes on

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businesses Plaza supply side is really just a fancy name

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for low tax economics The idea is that reducing taxes

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especially on businesses and the wealthy would incentivize investment in

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production which would boost supply in the marketplace So c

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

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in washington over whether or not supply side economics actually

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

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connection between tax policy discussions and overall sleeping Uh yeah