Your opinon please?

Question

Some economists favor polices that stimulate demand, while other favor those that stimulate the supply of goods and services. Still other economists prefer policies based on the growth of the money supply. With which group of economists do you agree? Provide reasons to support your choice.

Answer 1

I think we should use all three methods at different times in the economic cycle.  Each brings advantages and disadvantages that are mitigated by the specific circumstances in which you find the economy on that particular date.

Answer 2

It depends on what is the situation with the economy.  If it is a bit slow, then it could be a good idea to lower interest rates.  If however, inflation hits, then it may need to be raised.  It all depends on what the health of the economy is.  One problem with keeping interest rates too low now is inflation.  Yet if we raise them, we could make the mortgage and credit problems higher.  We need a balance, a middle ground between int. rates high or low.  

Same goes for stimulating demand- as with tax cuts, spending.  One must be careful with how they use tax cuts and such.  If they do it too much, as right now, there are deficits. And that slows down the economy by increasing debt and making the dollar have smaller value.

However, tax cuts can be good if used wisely during a period of slow growth or in surplus (if we cut taxes a bit, we can stimulate economy even more, but we must ensure we don't cut way too much or else there would be deficits).

Just my opinions.

Answer 3

I think it is dangerous to only go with one ideal or the other.

There are times when the best thing to do is raise demand, others supply and other it is smarter to fouc on the money supply

the trick is to find the write balance and now when to do what