Monetary Policy Vs Supply-Side Economics

The government takes action to influence the economy. Economic policy refers to the actions that governments take in the economic field, economic policy hopes to accomplish a constant flow of supply and demand as well as incoming money. The economy has many working factors such as; supply-side economics, demand-side economics, and monetary policy.
Supply-Side economics emphasizes the thought of strong economy policies that remove impediments to supply. Supply-Side economics originated from President Ronald Reagan, and is known as "Reaganomics" or "trickle-down" policy. Reagan popularized the idea that greater tax cuts for investors and entrepreneurs provide incentives to save and invest, and produce economic benefits that trickle down into the overall economy. Methods such as; lowering tax rates so workers prefer …show more content…
The Federal Reserve sets the nation's monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates. Three tools the Federal Reserve use are the discount rate, reserve requirements, and open market operations. The discount rate is the interest rate Reserve Banks charge commercial banks for short-term loans. Reserve requirements are the portions of deposits that banks must hold in cash, either in their vaults or on deposit at a Reserve Bank. By far, the most frequently used tool is open market operations, the buying and selling of U.S. government securities. The Fed operates with little to no influence from the government. The level of unemployment in the U.S. rose to over 10% for the first time since the Great Depression. However, the monetary policy objective of lowering inflation seemed to have been met. The monetary policy seems to work great for the government and the U.S. The Monetary policy, Supply-side economics, and demand-side economics seem to work together in order to achieve a well working