"Education is the best economic policy there is." - Tony Blair
Many influential politicians and economists believe that economic policy directly affects the work force. That "bad" economic policy directly affects human capital. However, the term "economic policy" has great potential to be misunderstood or taken at face value. What exactly is this economic policy that is strong enough to diminish human capital and to destroy the American spirit? Simply put, economic policy is the action(s) taken by a government to influence it 's economy. Most economic policy is geared towards maintaining a healthy economy and takes the form of regulations, taxes, tariffs, etc. There may be a wide range of goals in any given piece of policy, however the most important measure of effectiveness when discussing these policies is likely how the value of currency is affected. There are three basic types of economic policy, those being supply-side economics, demand-side economics, and monetary policy.
Supply-side economics is policy that seeks to create incentives for production through tax and fiscal policy. In a broader sense, supply-side economics seeks to deregulate the market to promote a flourishing economy through sound money and free trade. Supply-side economics is a relatively young theory of economic policy that has seen much use throughout history, despite only recently becoming a published theory. In the 25 years betwee...
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... Fed uses to accomplish all of these tasks are the discount rate, open market operations, and the reserve requirement. The Fed operates on the idea that the best kind of economy is the decentralized kind and operates with little input from the central government.
There are many different economic ideologies and policies. Each has it 's own strengths, weaknesses, and mysteries to deal with. Supply-side economics favors the wealthy. Keynesian economics favors the consumer and has severe long-term consequences. Monetary policy is the only way to manage and mitigate the strengths and weaknesses of economic ideologies and the Fed was created to that purpose and that purpose alone. We may often look at tax and interest rates and be disappointed by what we see. It is important for every American to realize that without economic policy, there would not be a stable economy.
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