What Is The Supply-Side And One Supply Side Strategy To Help The Economy

“For example, the federal government regulates the quality of food and water, the safety of workplaces and airspaces, and the integrity of the banking and finance system.” (Bianco, Canon 2011, p 582) Regulations find out if the product is a market failure. There are two types of regulations, which are economic and social. “Economic regulations sets prices or conditions on entry of firms into an industry, where as social regulation address issues of quality and safety.” (Bianco, Canon 2011, p 582) Economic regulations are concerned with the price regulation of monopolies.

Supply-Side economics and policies would best benefit the economy in the case of a recession next year.

When there are problems in the United States economy, whom do the people turn to? The most obvious answer is the government. The federal government is given the responsibility of maintaining a stable economy. When the economy is not stable, like during a recession, the American people turn the government and demand that they fix whatever problem is occurring. The government can handle the economy in a recessionary period in one of two ways: expansionary fiscal policy or expansionary monetary policy. The sector of the government that handles the economy using these policies in a recession is the Federal Reserve. The best course of action to get the United States out of a recession is to use expansionary monetary policy.

Up until the 1880s, the United States economy followed the policy of laissez-faire (the idea that the government should have no involvement in the economy), and this led to competition which led to good prices of goods for the average consumer. However with the growth of many large companies that controlled the market, prices of goods raised due to the lack of competition. With consumers becoming frustrated and prices constantly rising, the government was forced to regulate the control of monopolies in the market.

Our economy is a machine that is ran by humans. A machine can only be as good as the person who makes it. This makes our economy susceptible to human error. A couple years ago the United States faced one of the greatest financial crisis since the Great Depression, which was the Great Recession. The Great Recession was a severe economic downturn that occurred in 2008 following the burst of the housing market. The government tried passing bills to see if anything would help it from becoming another Great Depression. Trying to aid the government was the Federal Reserve. The Federal Reserve went through a couple strategies in order to help the economy recover. The Federal Reserve provided three major strategies to start moving the economy in a better direction. The first strategy was primarily focused on the central bank’s role of the lender of last resort. The second strategy was meant to provide provision of liquidity directly to borrowers and investors in key credit markets. The last strategy was for the Federal Reserve to expand its open market operations to support the credit markets still working, as well as trying to push long term interest rates down. Since time has passed on since the Great Recession it has been a long road. In this essay we will take a time to reflect on these strategies to see how they helped.

The public interest theory of regulation, or economic theory of regulation states that industrial regulation is essential in maintaining a natural monopoly. Natural monopolies turning into a regular monopoly charging monopoly prices can be harmful to society. Something that everyone most generally uses or needs like public resources i.e. electricity and water. Almost every person in our society requires these resources. The initial cost for creating a firm that can provide these services is high. Some startup cost can include power stations as well as power lines, labor costs, the cost of producing the power, and many other costs. These naturally occurring costs can often bar entry or discourage entry into the industry. In the event that a firm does make it into the industry and starts producing these public resources such as

Recession cycles are thought to be a normal part of living in a world of inexact balances between supply and demand. What turns a usually mild and short recession or "ordinary" business cycle into an actual depression is a subject of debate and concern. Scholars have not agreed on the exact causes and their relative importance. The search for causes is closely connected to the question of how to avoid a future depression, and so the political and policy viewpoints of scholars are mixed into the analysis of historic events eight decades ago. The even larger question is whether it was largely a failure on the part of free markets or largely a failure on the part of government efforts to regulate interest rates, curtail widespread bank failures, and control the money supply. Those who believe in a large role for the state in the economy believe it was mostly a failure of the free markets and those who believe in free markets believe it was mostly a failure of government that compounded the problem.

One strategy through which the economy could overcome a recession is a change in government purchases. In my hometown, Memphis, the crime rate is extremely high. If the city increased fire and police protection within our city this will in turn increase income. We learn that the aggregate demand curve shift by a sum equivalent to the initial change in government purchases times the multiplier. The multiplied effect of the change in government purchases happens because the increase in government purchases increases salary, which thus expands consumption. Then, part of the effect of the increase in aggregate demand is consumed by higher costs, keeping the full increment in genuine GDP that would have happened if the price level did not rise.

There is much debate on whether the government should have a big or lesser role in regulating the economy. Many people think that the government should be more involved, but I believe that the government should receive a lesser role in regulating the economy because of how it affects individuals in global trade and corporations. Less government regulation in global trade will be a better decision and create lesser problems. The purpose of the government in a global trade is to make sure that the transaction between consumers and producers is not interrupted. They must make sure that goods being sent into the United States are safe and the right products. If they are not safe, it puts citizens in

This paper will discuss the proposed views on the advantages and disadvantages of government regulations on businesses.

Regulation is defined as a law, rule, or other order prescribed by authority, especially to regulate conduct. Deregulation is defined as to remove government regulatory controls from an industry, a commodity, etc. The big question is can an institution of any type able to self-regulate in an appropriate manner. Are they able to put profit to the side for the health and safety of people? Are they capable of making ethical decisions and to not adversely affect people? Does the past indicate this? And if they display good judgment should regulation be scaled back?

The direct economic regulation of business by independent government commissions has a one-hundred year history on the North American continent. It is generally asserted that the purpose of such commissions is to protect consumers from exploitation by limiting the economic powers of certain firms having pervasive effects on the public interest (for example, transportation companies and public utilities). . However, the findings of the relatively few em-pirical studies of the economic effects of regulation indicate that important differences actually do exist in these effects. The

Too much regulation on the economy can have a negative impact in many ways. The biggest reason as to why many are so terribly against too much regulation is because

”Free trade policies have created a level of competition in today's open market that engenders continual innovation and leads to better products, better-paying jobs, new markets, and increased savings and investment” (Denise Froning). Though Free trade plays a huge role in the economy today because of what and where it is used. Free trade allows for traders to trade across national boundaries and other countries without government interference. Meaning that traders have very few regulations that allow for them to do this without the government intervening. Free trade makes things for traders much easier and also allows for many more jobs in the US, such as exporting jobs, or jobs in the auto industry and plants. Though there are many

Supply shocks are a common phenomenon in the market situations. It is an event whereby there is a sudden change of service and goods prices due to an instant change in the supply function of the market. Supply shocks exist in two forms; negative supply shock and positive supply shock. The two types of supply shocks lead to the effect on the equilibrium price. Negative supply shocks involve the sudden decrease in supply and the instant increase in price of commodity. The end result of the negative supply shocks involve the stagflation of the market whereby output falls with raising prices. Positive supply shocks involve an increase in the supply of a commodity (Lewis & Mizen 2000). The essay aims at analyzing and describing the role of supply shocks in models of optimal discretionary monetary policy and reflecting on the application of the shocks to help central bankers in the financial crisis of 2007 to 2008.