Supply-Side Economics

• 1). Begin with the system more frequently advocated by politically conservative individuals: supply-side economic theory.
  
  
• 2). Say that according to some conservative view points, businesses and the individuals who run them drive the economy. They create the jobs that will help the jobless become employed once again. The incentives that businesses and entrepreneurs have to expand and create businesses, and, by extension, new jobs, is tied to how profitable those ventures will be.
  
  
• 3). Continue by saying that according to this conservative position, the tax burden under which businesses operate dictates the incentives they have to expand or not to expand. If the tax rates are too high, then the money businesses and entrepreneurs would have left after making additional profits would not be enough to make the expansion and associated growth for the greater economy worth the investment.
  
  
• 4). Conclude by saying that, according to this position, if the government cuts taxes and reduces regulations that cost businesses additional money, then the businesses would stimulate the economy themselves by expanding. This will result in more jobs and more business happening between businesses.
  
  

Cash Injections

• 1). Introduce the idea of the government stimulating the economy by directly injecting large amounts of money into it with the often used analogy of jump-starting a car battery. When an engine is running, it can recharge the battery and run on its own. However, if the battery dies, the engine can't start. Once the engine starts, it can recharge the battery again, but it needs a jump start before it can recharge the battery on its own.
  
  
• 2). Explain that liberal economists who support Keynesian style theories of deficit spending consider consumer spending the lifeblood of the economy. When people are spending money, businesses will make money and expand. This will cause the businesses to hire more employees and furnish them with money they can spend in the economy. In this way, the economy acts as a virtuous cycle.
  
  
• 3). Point out that this theory assumes that when consumer spending stops, the car battery of the economy will die. If people aren't spending money then businesses can't hire new workers or even maintain the workers they currently have. This begins a vicious cycle perpetuates a continuously worsening economy.
  
  
• 4). Conclude by showing how, according to Keynesian theory, the government directly injecting money into the economy is analogous to jump starting a car battery. If consumers are given money, then they can restart the virtuous cycle of economic development.