Question:
How can both Demand and Supply Side be used Together? Use Unemployment as an Example
Author: eric_galvaoAnswer:
-Loose Fiscal Policy boosting AD can Reduce Unemployment. But this can do Naught to the NRU [Natural Rate of Unemployment] so when the Policy ends, Unemployment may return back to its ‘Pre-Boost Equilibrium’ -So a Supply Side may be used to Reduce the NRU - make it Long lasting. This can be done via Tax Breaks [Firms Invest] & Increased Incentive to Worker -This can hopefully mean the NRU goes Down as well as Unemployment
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