Modern Economic Theories


Two controversial economic policies are Keynesian economics
and Supply Side economics. They represent opposite sides of the
economic policy spectrum and were introduced at opposite ends of the
20th century, yet still are the most famous for their effects on
the economy of the United States when they were used.


The founder of Keynesian economic theory was John Maynard
Keynes. He made many great accomplishments during his time and
probably his greatest was what he did for America in its hour of need.
During the 1920's, the U.S. experienced a stock market crash of
enormous proportions which crippled the economy for years. ...

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As far as stressing extremes, Keynesian economics pushed for a
“happy medium” where output and prices are constant, and there is no
surplus in supply, but also no deficit. Supply Side economics
emphasized the supply of goods and services. Supply Side economics
supports higher taxes and less government spending to help economy.
Unfortunately, the Supply Side theory was applied in excess during
a period in which it was not completely necessary.


The Supply Side theory, also known as Reganomics, was
initiated during the Regan administration. During the 1970's, the
state and local governments increased sales and excise taxes. These
taxes were passed from business to business and finally to the
customer, resulting in higher prices. Along with raised taxes for
the middle and lower classes, this effect was compounded because
there was little incentive to work if even more was going to ...

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PAPER DETAILS
Added: 2/18/2004 08:02:32 PM
Category: Economics
Type: Premium Paper
Words: 499
Pages: 2

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