Competing theories about short-run instability

Demand-side theories

Activities

Wikipedia: "Keynesian Economics"

• Read this article, which covers several aspects of contemporary macroeconomic thinking. Note the emphasis on managing aggregate demand by changing variables that can alter aggregate expenditures. Some economists argue it is easier and better to prompt changes in consumption, investment, government spending, and net exports than to prompt changes in variables that affect aggregate supply.

Supply-side theories

Activities

Wikipedia: "Supply Side Economics"

• Read this article, which covers several aspects of contemporary macroeconomic thinking. Note the emphasis on managing aggregate supply by changing variables including tax rates, deregulating industries, providing incentives for employers to hire workers, and so forth. Some economists argue it is easier and better to prompt changes in the supply side than to prompt changes in variables that affect aggregate demand.