Supply-side economists contend that aggregate supply is the relevant policy factor in inﬂuencing
the price level and real output in an economy.

Question

Quizplus · Accepted Answer

Supply-side economists believe that policies aimed at increasing the availability of goods and services (i.e. aggregate supply) will lead to an increase in real output and a decrease in the price level. They argue that policies targeting demand (i.e. aggregate demand) may lead to short-term gains but can create inflationary pressures in the long run.

Supply-Side Economists Contend That Aggregate Supply Is the Relevant Policy