Demand Side vs Supply-Side Economics

What do demand side economics pertain to?

• consumers who purchase goods and services

• investment spending by firms

• Changes in corporate taxes and subsidies

• spending by the government

What do supply-side economics pertain to?

• Behaviors of all consumers who purchase goods and services

• Behaviors of all firms who produce goods and services

• investment spending by firms

• Government expenditures

Which side of economics focuses on influencing aggregate demand and consumer behaviors?

• Demand side economics

• Supply-side economics

• Both demand side and supply-side economics

• None of the above

What can government change to influence aggregate supply and the behavior of firms?

• Consumer spending

• Investment spending

• Corporate taxes and subsidies

• Government expenditures

Why are supply-side policies considered unpredictable?

• Government cannot force firms to produce a greater or lesser amount of real GDP output

• Supply-side policies are not influenced by government actions

• Supply-side policies have instant effects on aggregate demand

• none of the above

What has an instant effect on aggregate demand when government alters its expenditures?

• Changes in consumption patterns as the government is acting as a consumer

• Changes in corporate taxes and subsidies

• Changes in government regulations

• Changes in investment spending

What is the goal of using policies that affect aggregate demand?

• To incentivize changes in output production

• To return the aggregate economy to long-run equilibrium

• To control the behavior of firms

• To increase government expenditures

What is the main difference between demand side and supply-side policies?

• Demand side policies are more predictable than supply-side policies

• Supply-side policies have instant effects on aggregate demand

• Demand side policies focus on subsidies

• Supply-side policies focus on changing government expenditures

What is the behavior that supply-side policies try to incentivize?

• Changes in consumer spending

• Changes in investment spending

• Changes in government regulations

• Changes in output production

Answer explanation

Changes in investment spending would have a direct impact to AD, not SRAS.