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Keynesian Economics vs Supply Side Economics Two controversial economic policies are Keynesian economics and Supply Side economics They represent opposite sides of the economic policy spectrum and were introduced at opposite ends of the 20th century yet still are the most famous for their effects on the economy of the United States when they were used The founder of Keynesian economic theory was John Maynard Keynes He made many great accomplishments during his time and probably his greatest was what he did for America in its hour of need During the 1920s the US experienced a stock market crash of enormous proportions which crippled the economy for years Keynes knew that to recover as soon as possible the government had to intervene and put a decrease on taxes along with an increase in spending By putting more money into the economy and allowing more Americans to keep what they earned the economy soon recovered and once again became prosperous Keynes ideas were very radical at the time and Keynes was called a socialist in disguise Keynes was not a socialist he just wanted to make sure that the people had enough money to invest and help the economy along As far as stressing extremes Keynesian economics pushed for a happy medium where output and prices are constant and there is no surplus in supply but also no deficit Supply Side economics emphasized the supply of goods and services Supply Side economics supports higher taxes and less government spending to help economy Unfortunately the Supply Side theory was applied in excess during a period in which it was not completely necessary The Supply Side theory also known as Reganomics was initiated during the Regan administration During the 1970s the state and local governments increased sales and excise taxes These taxes were passed from business to business and finally to the customer resulting in higher prices Along with raised taxes for the middle and lower classes this
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