hey there and welcome back to heimlich's history now i've been going through unit four of the ap government curriculum and in this video we're going to talk about how political ideology shapes economic policy so if you're ready to get them bring cow's milk supply side style well then let's get to it so in this video here's what we're trying to do describe different political ideologies on the role of government in regulating the marketplace easy peasy lemon squeezy so if you're here for the last couple of videos i've been describing different political ideologies and their respective commitments and we focused on liberal and conservative ideology and just to keep things spicy we're going to go ahead and add a third ideology to the mix in this video namely libertarian ideology so how do each of these ideologies think about government intervention in the economy so glad you asked let's talk about it now if we're going to talk economics there are two terms that you're going to need to be familiar with and the first is fiscal policy fiscal policy refers to decisions the government makes about government spending and taxation so fiscal policy is the decision that the government has to make about how much money to spend and on what like do we really need another f-15 fighter jet oh yeah okay so when the government decides on that kind of thing that is fiscal policy and this is under the control of congress who decides what to spend where the second term you need to know is monetary policy now monetary policy refers to the decisions the government makes about how much money should be in the economy the reason i have this little green bill in my wallet is because the government has decided that there needs to be money in the economy so when the government decides to put more of those bills into the economy or take some out they are engaging in monetary policy and this is under the control of the federal reserve often referred to as the fed and the fed does this by buying and selling government bonds setting reserve requirement at banks which means they mandate how much money the banks have to keep in their faults and setting interest rates okay to sum up fiscal policy government spending and taxation monetary policy how much money is in the economy so with that said let's talk about how different ideologies approach these different policies liberals tend to favor the most government intervention in the economy compared to the other ideologies to liberals government spending and government regulation of business is what keeps the economy strong and keeps everyone safe and secure so when it comes to fiscal policies liberals are big spenders and they didn't just pluck that idea out of the realm of unicorns and rainbows they actually have theoretical support for this idea and the name for it is keynesian economics and this theory really majors on fiscal policy this theory came into fashion in the 1930s in the midst of the great depression in the election of democrat franklin roosevelt now i mentioned in the previous video that the president preceding roosevelt namely herbert hoover was a conservative and so when the stock market crashed and the great depression began and all turned to doom and gloom hoover's conservative position led him to do very little to hoover like the market is going to correct itself in the long run and all shall be well no need to get big daddy government meddling in the economy that's when john maynard keynes came along and rebuked hoover and all who thought in similar ways saying in the long run we're all dead in other words yes the economy will correct itself in the long run but there is immense suffering now and something must be done while people are suffering besides just waiting for the resolution of the crisis so roosevelt being a good keynesian pumped up government spending like a boss by providing federal work programs and economic safety nets in the form of social security now conservatives on the other hand want less government intervention in the economy to conservatives letting the free market determine people's choices is a far better solution than getting the government involved to them this position upholds people's freedom to make their own economic choices and keeps the government from piling up debt to pay for all the programs so when it comes to fiscal policy conservatives want less government programs and lower taxes and again conservatives didn't just pluck these ideas out of the realm of unicorns they do have theoretical support for it and it comes in the form of supply-side economics if keynesians want to address economic woes through government spending supply siders want to address economic woes by supporting businesses the idea here is that if more goods are injected into the economy then such an action will shore up economic turmoil and who produces goods for the economy businesses now as you probably know the most basic terms of free market economics are supply and demand businesses supply goods according to the demand from the consumers and so that's why it's called supply-side economics support the supply side of that equation which is to say businesses the producers of goods and the economy will be good so the way conservatives propose to do that is by keeping government regulations of business to a minimum and lowering taxes so that people have more money to spend on those goods now i haven't said anything about how conservatives and liberals view monetary policy and that's because it's pretty complicated however what you do need to know for your exam is this conservatives tend to favor using monetary policy to stabilize the economy whereas liberals tend to believe that monetary policy is too slow to affect real change okay now let's talk about libertarian ideology and the truth is libertarians are strange birds that are difficult to classify on the whole but since we're talking about economics in this video you should know that libertarians want the least amount of government intervention possible to libertarians the only thing the government is good for economically speaking is to protect personal property rights and ensure that nothing hinders voluntary trade they want no regulation on businesses and minimal government programs okay thanks for watching click right here to grab review packet which is going to help you get an a in your class and a 5 on your exam in may if this video helped you and you want me to keep making them then by all means subscribe and i shall oblige i'm out