Question is this -How government intervenes in the economy from three perspectives: Fiscal, Monetary, and Supply Side efforts. You have also now looked at the criticisms of government involvement from the Classical perspective. Which approach makes the most sense to you?
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This is Answer-After learning about the classical economic viewpoint and the criticisms of government from it, I don't think there is one single approach that makes the most sense to me between fiscal, monetary, and supply-side policies. I think a minimal mix of the three is okay, and for each, they have their own given situations where they may work best in comparison to the others, or even work in conjunction with one another.
Increasing aggregate demand through fiscal policy may help the economy with unemployment and price levels, or it may hurt the economy instead and leave it in a worse state than it was previously found to be at. This could create artificial demand where there isn't true demand from the consumers. This could trick business and mess them up.
Controlling the supply of money through monetary policy may be helpful to the economy for taming inflation and keeping price stability. Controlling it too much could cause problems such as market unpredictability, which in turn could cause mixed results such as to scare people away or draw them into borrowing less or more money.
Increasing supply through supply-side policies may help the economy with unemployment and price levels. It could hurt people in ways such as people not receiving federal funding, or receive less of it (budget cuts in whatever that may be) due to tax cuts, exemptions, etc., from the government to businesses.
With these three perspectives in mind, I would prefer to see a more classical approach to economic situations. The perspectives of fiscal, monetary, and supply-side policy I think can each be helpful but would be best if they didn't have to be implemented in the first place. They have the potential to cause damage to the economy. After watching the classical economics video and reading the chapter, one thing that stood out to me and I think summarizes government involvement from a classical economists viewpoint is the government's role is like being the umpire in a baseball game. They should make sure everyone plays by the rules and only enters the game as a last resort. That approach makes sense to me.
