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Supply Side Economic Policy

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Economic policy is the actions taken by the government to influence its economy. These actions include three different types of approaches. The policies were made in hopes to make sure the economy is stable at all times. The three policies used include the supply-side economic policy, the demand-side economic policy, and the monetary policy. To begin, the supply-side economic policy was created in order to lower unemployment by increasing output. The idea of the supply-side economic policy is to increase output instead of demand. The supply-side economic policy was created by a man named Herbert Stein. This policy was popular during the Nixon administration around the 1970s. This policy was used by President Reagan, it became popular in the 1980s. This use of the economic policy is one of …show more content…

The idea of this policy is for the money supply to grow steadily at a slow pace. The reason for this is to control the economies inflation to allow the economy to grow. The Federal Reserve is the nation’s central bank. The Federal Reserve's job is to regulate the amount of money and credit available to the economy. The goals that were set out to be achieved are to encourage maximum employment, make prices stable, and make long-term interest rates reasonable. The three tools of the Federal Reserve are open market operations, discount rate, and reserve requirements. Open market operations are when the Fed buys and sells U.S. government securities in financial markets. Discount rate is what banks have to pay based on the interest the Fed charges for loans. Reserve requirements are the amount of funds a bank is required to have in reserve. There were long-run impacts of the monetary policy in the 1700s, this was because the Spanish brought gold and silver from the Americas to Spain which then caused inflation. All in all, those are the three economic

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