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Supply-Side Policy

Explain how governments' supply-side policy can influence the economy and list the main types of supply-side policy. Explain each type.

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A government's supply-side policy can influence the economy due to the fact that these policies can result in a tremendous increase in the amount or supply of goods and services that are available to the consumers. This is a very important influence on the economy of any nation, due to the fact that a greater availability of goods and services will provide a much greater number of consumers with the opportunity to purchase these goods, and thereby greatly increase the probability that a greater number of consumers will consume these goods and services, and thereby place more money into the economy. This will also result in a greater level of profitability for suppliers of these goods and services, which will also produce a beneficial effect to the economy, due to the fact that this would allow these organizations to be able to produce even more goods and services, as well as to be able to hire additional employees that are needed to produce these goods and services. This increased level of employed individuals will provide an additional positive effect on the economy, due to the fact that these individuals will have more spendable income to purchase goods and services, which will also provide an additional boost to the economy which results in an economic cycle of mutual benefits between consumers and suppliers. The longer that this cycle continues uninterrupted, the greater the number of goods and services that are available to consumers, the greater the level of spending by consumers, the greater the level of profitability of suppliers, and a subsequent continuous decrease in the unemployment rate. These are tremendously positive economic results of effective government supply-side policies that have been well thought out and implemented. It is also important to mention that another influence that supply-side policy can have on the economy, is for the ...

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This solution discusses supply-side policy.

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