0:00 hey everybody welcome back I actually
0:01 have a M's in economics so this lesson
0:03 is kind of my jam smash that like button
0:06 let's
0:07 [Music]
0:10 go okay so we're going to start with our
0:12 three ideologies from the last video and
0:14 talk about their preferences when it
0:16 comes to Economic Policy let's start
0:18 with liberals liberals usually favor
0:20 more economic regulation arguing that
0:23 corporations are too powerful and
0:25 therefore need to be restricted they
0:27 typically favor higher taxes on people
0:29 who earn higher incomes probably because
0:31 they tend to focus more on economic
0:34 equality than economic freedom they want
0:36 that increased tax revenue so that the
0:38 government can spend more money on
0:40 entitlement programs and often advocate
0:43 for even more expansive federal spending
0:45 on things like Health Care College
0:48 subsidies and the like conservatives
0:50 typically favor less economic regulation
0:53 allowing people to trade as they wish
0:55 again that's the traditional
0:57 conservative Trump style conservative
1:00 nationalists are more mixed on their
1:02 support for free trade and opposition to
1:04 regulations though when it comes to tax
1:06 and spending conservatives are unified
1:08 supporting tax cuts and favor cutting
1:11 spending on things like entitlement
1:12 programs especially entitlement programs
1:14 that provide assistance based on income
1:16 and you know that Libertarians are all
1:18 about Freedom so when it comes to the
1:20 marketplace they want little to no
1:23 regulations Beyond protecting property
1:25 rights and voluntary trade it's not that
1:28 the market is perfect but it leads to
1:30 better results than anything politicians
1:32 can do similarly they argue that there
1:34 should be minimal Taxation and this
1:36 makes sense given their desire to
1:38 dramatically reduce government spending
1:40 and the size of government they favor
1:42 dramatically cutting spending on
1:44 entitlement programs as they believe
1:46 that assisting the needy is better left
1:48 to private charity than to governments
1:50 okay but now let's get even more
1:52 specific back in unit 2 we Define fiscal
1:55 policy as tax and spending policies
1:57 Congress and the president are in charge
1:59 of fiscal polic policy one of the many
2:01 fiscal policy debates is over what if
2:03 anything governments should do when the
2:06 economy is in a recession two of The
2:08 prominent economic schools of thought in
2:09 this area are Keynesian and supply side
2:12 economics Keynesian economics is named
2:14 for famed economist John Maynard kees he
2:17 argued that when the economy is in a
2:19 recession that government spending
2:21 should be dramatically increased to
2:24 jumpstart the economy increasing
2:26 spending and getting people back to work
2:28 remember when part of the federal respon
2:30 to co was to dramatically increase
2:32 unemployment benefits and to send
2:34 basically everybody in the country a few
2:36 checks that's pure Keynesian economics
2:39 the idea is that people will spend that
2:41 money and it'll trigger a multiplier
2:43 effect of even more spending supply side
2:45 economics disagrees and is based on the
2:47 idea that the production of goods is
2:50 more important than the consumption so
2:52 supporters argue that during recessions
2:54 the government should cut taxes to
2:56 encourage businesses to grow and hire
2:58 workers and that it leaves more money in
3:00 people's pockets and that this will help
3:02 get the nation out of a recession most
3:04 commonly Keynesian economics is
3:06 associated with liberals and supply side
3:08 with conservatives but this is a bit of
3:11 an oversimplification meanwhile
3:13 libertarian free market types argue
3:15 against any government response to
3:17 recessions focusing on the inflation and
3:20 crowding out that these policies can
3:21 cause while keynine and suppli siders
3:24 disagree about the appropriate policy
3:26 action they agree that government should
3:28 do something all right and one last
3:30 thing we need to discuss is monetary
3:32 policy now this isn't an economics class
3:35 so I think you mostly want to be able to
3:37 identify whether something is fiscal or
3:39 monetary policy monetary policy refers
3:42 to actions taken to influence interest
3:44 rates affecting the broader economy
3:46 interest rates represent the cost of
3:48 borrowing money so lower interest rates
3:51 encourage people to borrow money and
3:53 this increases economic activity while
3:56 higher interest rates do the opposite
3:58 encouraging people to borrow less money
4:00 and this slows down the economy monetary
4:03 policy is conducted by the Federal
4:04 Reserve and Independent Regulatory
4:06 Commission and the idea is to remove
4:09 these very important monetary policy
4:11 decisions from politics so whereas
4:14 fiscal policy is very political monetary
4:17 policy is not supposed to be political
4:19 at all the Federal Reserve has a dual
4:22 mandate from Congress meaning that they
4:24 have two policy goals for the economy to
4:26 achieve maximum employment and price
4:29 stability that's the fancy way of saying
4:31 that they want to keep unemployment and
4:33 inflation low I don't think you'll need
4:35 more detail than this so I'm going to
4:36 keep this part as simple as possible if
4:39 inflation is high like it's been since
4:41 2021 the FED should raise interest rates
4:44 as they've done dramatically between
4:46 2022 and
4:48 2023 this should eventually bring
4:50 inflation down when unemployment is high
4:53 the thinking goes the FED should lower
4:55 interest rates to stimulate the economy
4:57 all right that's it for this one until
4:59 next time this has been a money
5:03 production thanks again for watching and
5:05 if you haven't already what are you
5:07 waiting for smash that like button
5:08 subscribe to my channel and you're
5:10 almost at the end of this unit so be
5:12 sure to check out the ultimate review
5:14 packet to help you get ready for that
5:16 test and eventually the AP exam and I
5:18 will see you in the next video
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