YouTube Transcript:
AP Gov 4_9 | Ideology & Economic Policy | NEW!

hey everybody welcome back I actually
have a M's in economics so this lesson
is kind of my jam smash that like button
let's
[Music]
go okay so we're going to start with our
three ideologies from the last video and
talk about their preferences when it
comes to Economic Policy let's start
with liberals liberals usually favor
more economic regulation arguing that
corporations are too powerful and
therefore need to be restricted they
typically favor higher taxes on people
who earn higher incomes probably because
they tend to focus more on economic
equality than economic freedom they want
that increased tax revenue so that the
government can spend more money on
entitlement programs and often advocate
for even more expansive federal spending
on things like Health Care College
subsidies and the like conservatives
typically favor less economic regulation
allowing people to trade as they wish
again that's the traditional
conservative Trump style conservative
nationalists are more mixed on their
support for free trade and opposition to
regulations though when it comes to tax
and spending conservatives are unified
supporting tax cuts and favor cutting
spending on things like entitlement
programs especially entitlement programs
that provide assistance based on income
and you know that Libertarians are all
about Freedom so when it comes to the
marketplace they want little to no
regulations Beyond protecting property
rights and voluntary trade it's not that
the market is perfect but it leads to
better results than anything politicians
can do similarly they argue that there
should be minimal Taxation and this
makes sense given their desire to
dramatically reduce government spending
and the size of government they favor
dramatically cutting spending on
entitlement programs as they believe
that assisting the needy is better left
to private charity than to governments
okay but now let's get even more
specific back in unit 2 we Define fiscal
policy as tax and spending policies
Congress and the president are in charge
of fiscal polic policy one of the many
fiscal policy debates is over what if
anything governments should do when the
economy is in a recession two of The
prominent economic schools of thought in
this area are Keynesian and supply side
economics Keynesian economics is named
for famed economist John Maynard kees he
argued that when the economy is in a
recession that government spending
should be dramatically increased to
jumpstart the economy increasing
spending and getting people back to work
remember when part of the federal respon
to co was to dramatically increase
unemployment benefits and to send
basically everybody in the country a few
checks that's pure Keynesian economics
the idea is that people will spend that
money and it'll trigger a multiplier
effect of even more spending supply side
economics disagrees and is based on the
idea that the production of goods is
more important than the consumption so
supporters argue that during recessions
the government should cut taxes to
encourage businesses to grow and hire
workers and that it leaves more money in
people's pockets and that this will help
get the nation out of a recession most
commonly Keynesian economics is
associated with liberals and supply side
with conservatives but this is a bit of
an oversimplification meanwhile
libertarian free market types argue
against any government response to
recessions focusing on the inflation and
crowding out that these policies can
cause while keynine and suppli siders
disagree about the appropriate policy
action they agree that government should
do something all right and one last
thing we need to discuss is monetary
policy now this isn't an economics class
so I think you mostly want to be able to
identify whether something is fiscal or
monetary policy monetary policy refers
to actions taken to influence interest
rates affecting the broader economy
interest rates represent the cost of
borrowing money so lower interest rates
encourage people to borrow money and
this increases economic activity while
higher interest rates do the opposite
encouraging people to borrow less money
and this slows down the economy monetary
policy is conducted by the Federal
Reserve and Independent Regulatory
Commission and the idea is to remove
these very important monetary policy
decisions from politics so whereas
fiscal policy is very political monetary
policy is not supposed to be political
at all the Federal Reserve has a dual
mandate from Congress meaning that they
have two policy goals for the economy to
achieve maximum employment and price
stability that's the fancy way of saying
that they want to keep unemployment and
inflation low I don't think you'll need
more detail than this so I'm going to
keep this part as simple as possible if
inflation is high like it's been since
2021 the FED should raise interest rates
as they've done dramatically between
2022 and
2023 this should eventually bring
inflation down when unemployment is high
the thinking goes the FED should lower
interest rates to stimulate the economy
all right that's it for this one until
next time this has been a money
production thanks again for watching and
if you haven't already what are you
waiting for smash that like button
subscribe to my channel and you're
almost at the end of this unit so be
sure to check out the ultimate review
packet to help you get ready for that
test and eventually the AP exam and I
will see you in the next video