Ideology and Economic Policy

Susan Lewis
5 min read
Study Guide Overview
This study guide covers liberal, conservative, socialist, progressive, and centrist economic ideologies, focusing on their views on government intervention in the marketplace. It explains fiscal and monetary policy, including expansionary and contractionary approaches. Finally, it compares Keynesian and supply-side economics, highlighting their differing approaches to economic regulation and providing historical examples.
AP US Government: Ideologies & Economic Policies - The Night Before Review ๐
Hey! Let's get you prepped and confident for tomorrow's exam. We're going to break down ideologies and economic policies, making sure everything clicks. Let's do this!
๐๏ธ Ideologies and Economic Policies: A Quick Overview
Understanding the different ideologies is crucial. They shape how people view the role of government in the economy. Here's a breakdown:
๐ฏ Core Ideologies
- Liberal (Progressive) Economics:
- Favors more government regulation of the marketplace.
- Believes the market isn't always fair and needs intervention for equality.
- Supports policies like:
- Increasing minimum wage
- Strong labor protections
- Environmental regulations
- Increased spending on social programs (education, healthcare, infrastructure)
- Sees the government as a redistributive force, using taxes to reduce inequality.
Key Idea: Government intervention promotes fairness and economic opportunity.
- Conservative Economics:
- Favors little to no government regulation of the marketplace.
- Believes the market is the best resource allocator; government intervention causes inefficiency.
- Supports policies like:
- Reducing taxes and regulations on businesses
- Protecting property rights (patents, copyrights)
- Emphasizes individual responsibility and self-reliance.
- Supports reduced welfare programs and government spending.
Key Idea: Free markets and individual initiative drive economic growth.
-
Socialism:
- Supports active government role in regulating the marketplace.
- Believes the government should ensure fair and equitable economic operation.
- Advocates for a strong safety net and prevention of monopolies.
-
Progressivism:
- Also supports an active government role in regulating the marketplace.
- Believes the government should promote fairness, equality, and protect rights.
- Supports government intervention for economic stability and preventing wealth concentration.
-
Centrism:
- Supports a balanced approach to government intervention.
- Believes in limited intervention for stability and fairness, avoiding market interference.
๐ Connecting Ideologies
It's important to see how these ideologies are not always black and white. For example, a 'liberal' might support some market-based solutions, and a 'conservative' might agree on the need for some regulation. Think of them as points on a spectrum rather than rigid categories. This nuance is often tested in the AP exam.
โ๏ธ Theoretical Economic Support
Letโs dive into the economic theories that underpin these ideologies. Understanding these will give you a deeper insight into policy debates.
๐ฐ Fiscal vs. Monetary Policy
Before we get into the theories, let's clarify two key tools:
-
Fiscal Policy: Government spending and taxation to influence the economy. Think of it like the government's budget: how it spends and how it taxes.
- Expansionary Fiscal Policy: Increase spending, reduce taxes (used during recessions).
- Contractionary Fiscal Policy: Reduce spending, increase taxes (used to cool down an economy).
-
Monetary Policy: Central bank (like the Federal Reserve) uses money supply and interest rates to influence the economy.
- Expansionary Monetary Policy: Increase money supply, lower interest rates (stimulates growth).
- Contractionary Monetary Policy: Decrease money supply, raise interest rates (slows down growth).
โ๏ธ Keynesian vs. Supply-Side Economics
These are two major opposing economic theories:
- Keynesian Economics:
- Supports an active role for the government in regulating the marketplace.
- Believes in using fiscal and monetary policies to stabilize the economy and prevent recessions.
- Government should increase spending during recessions to boost demand.
- Monetary policy (lowering interest rates) encourages borrowing and spending.
Think Keynesian = Kickstarting the economy with government spending.
- Supply-Side Economics:
- Supports a limited role for the government in regulating the marketplace.
- Government should create a favorable business environment by cutting taxes and regulations.
- Lower taxes on businesses and individuals will increase the incentive to work, save, and invest.
- Reduced regulations allow businesses to operate more efficiently.
Think Supply-side = Stimulating the economy by freeing businesses.



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