Question

Discuss supply side economics in the context of a negative temporary supply shock of the 1970s a. what arte the primary supply side policies? b in your opinion does President Trump have supply side economics built into his economic platform?

Answer 1

Ans; A supply shock means, it is an incident that quickly increases or decreases the supply of a product or service, or of product and services in general.

And one who was here at the formation of “supply-side economics” back in the 1970s, creating a new agreement among economists on how to look at the national economy. But today it has become a frequently misleading and meaningless word that gets in the way of good economic policy.

And in today's world supply-side economics has become related with a complex for cutting taxes under any and all situation.And no longer do its defender in Congress and elsewhere constrict themselves to cutting marginal tax rates and also the tax on each additional dollar earned as the original supply siders and also, they carry even the economically uncertain tax cuts with the same intensity.

And actually a positive supply shock increases output causing prices to decrease, while the negative supply shock decreases output making prices to increase.

Supply shocks can be produce by any unexpected event that control output or disorder the supply chain, such as natural disasters or geopolitical events.

For example,Crude oil is a product that is considered vulnerable to negative supply shocks due to its uncomfortable Middle East location.

Supply-side policies are government aim to increase productivity and shift aggregate supply to the right.there are two types-

-- Free-market supply-side policies:it involve policies to increase competitiveness and competition. For example,free trade, lower income tax rates, and decreased power of trade unions.

-- Interventionist supply-side policies:it involve government involvement to overcome market failure. For example, higher government sharing on transport and communication.

yes, in my opinion President Trump have supply side economics built into his economic platform because it is coming in force with Trump's tax plan.that is supply-side economists says that tax cuts encourage economic growth.that growth make up an shortage resulting from the fact that the government is taking in less revenue.

Thanks..