Keynesian Theory vs. Supply Side

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Two very 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 demand side economics that inspires government action to increase or decrease demand and output. Classical economists had looked at the equilibrium of supply and demand for individuals, but Keynesians focuses on the economy as a whole. Keynesian economics is also an idea basically including three sectors which are individuals, business, and government and the actions that government takes. This theory proposes that using the fiscal policy the government should help the economy. Keynesian economics tried to reach a level of equilibrium within the economy where output and prices are constant; there was no surplus in supply, and no deficit. Keynes idea seemed very different and at the time and Keynes was considered a socialist. Keynes in actuality was not a socialist, but he was trying to make sure that the people had enough money to save the economy. The Supply Side economics also known to many as Reaganomics was introduced during the Regan administration. Supply Side economics stresses the influence of taxation on the economy. Supply Side is a school of economics that believes tax cuts can help an economy by raising supply. Supply Side also emphasized the supply of goods and services, this supports higher taxes and less government spend... ... middle of paper ... ...onomics and Liberty.com. Web. 3 Dec 2013. . Gwartney, James D. "Supply-Side Economics." Supply-Side Economics n.pag. Library of Economics and Liberty.com. Web. 3 Dec 2013. . "Supply Side Policy." Supply Side Policy n.pag.Economics Online. Com. Web. 3 Dec 2013. . "KEYNESIAN ECONOMIC POLICIES." KEYNESIAN ECONOMIC POLICIES n.pag. Library of Economics and Liberty.com. Web. 3 Dec 2013. . Kimberly, Amadeo. "Supply-side Economics - What Is It and Does It Work? ." Supply-side Economics - What Is It and Does It Work? n.pag. About.com. Web. 3 Dec 2013. .

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