The paper "Supply Side Economics or Demand Side Economics" is a great example of a report on macro and microeconomics. Government intervention to economic challenges has varied over time due to their economic adviser's view. The supply-side economist has always argued for the lowering additional tax rates for the producers of good and services and less government intervention in the production process while the monetarist on the other hand has been standing for the lowering of taxes to the low-income workers in order to improve on the demand of products. This paper will analyze both supply-side and demand-side economic views and provide a recommendation for the best option. Literature review The main concern of any government having a growing and sustainable economic development that will ensure that all produced goods and services find a ready market.
The main leverage in ensuring that a country’ s economy maintains equilibrium in the production and consumption of goods and services is in having a relevant taxation scheme. Variations in the state of the country’ s economic parameters like employment levels, inflation, and gross domestic product requires government intervention in the form of monitory policies therefore taxation and other measures will be used. Supply Side economics Supply-side economics involves the use of tax cuts in order to increase the supply of goods and services in the economy.
It is a laissez-faire form of intervention to the depression-related economic challenges where it is believed that economic problems usually stabilize themselves naturally. Supply-side economics mainly focuses on tax cuts for the rich who can further invest their savings resulting in an order for them to build more industries and manufacturing or production plants therefore more goods and services will be produced.
The central pillar in supply-side economics is the belief that tax cuts cause economic growth by stimulating investments in production facilities like factories, office buildings, and research and developments which are key in increased production and innovation. Supply-side economics is therefore sound when it comes to taxation cuts for the already-wealthy persons in the economy leading to more desire to be wealthy but for the case of the working-class majority, it tends more towards Keynesian economics where tax reduction is believed to induce increased consumptions of goods and services.
ReferencesSterner, T., 1996. Economic Policies for Sustainable Development. Dordrecht: Kluwer Academic publishers.