Economic Policy Essay - 1579 Words

Economic Policy in Recent U.S. History In the highly materialistic world that we live in, success is generally measured in financial terms. The same is true in politics, where the success of a politician, especially the President, is measured by how well the economy did during his term in office. It is specifically measured by how well they bring down unemployment, grow the economy and fight inflation. Two basic modes of thought on the subject have pervaded public policy since World War II: supply-side and demand-side economics. Demand-side economics is generally known as Keynesianism, named after the English economist John Maynard Keynes. He believed that governments should force interest rates down by printing money and lending it†¦show more content†¦Many demand side advocates predicted that this would only increase inflation, unemployment, and lead to a general decline in the economy. Contrary to these predictions the economy recovered at a rate even faster than the Reagan administration had predicted. nbsp;nbsp;nbsp;nbsp;nbsp;The major problem with the policy at this time was that the congress was still led by demand-side liberals. They said that these tax-cuts would produce a budget surplus and instead of using this surplus to offset the revenue loss from taxes, they just increased their spending, which caused the national debt to increase from one to four trillion dollars from 1981 to 1986. Another problem with this supply side ideology was that it was seen as giving the rich more of an advantage, because they were getting more of a tax break than less wealthy peoples. However this was the whole point of the trickle down idea. If you can increase the benefits to the people at the top then those benefits should trickle down to the lower classes, and stimulate economic growth throughout the economy. Throughout this period monetary policy, implemented by the independent Federal Reserve Board, commonly known as the Fed, was used to try to fine tune the short term economic situation by manipulating the interest rate, and the moneyShow MoreRelatedEconomic 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. 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