Question

Explain one of the reasons why policymakers usually focus on demand-side policies to achieve their macroeconomic goals as opposed to the supply-side ones. Provide one example of a demand-side policy and explain why and how it causes the aggregate demand to shift.
Similarly, for the supply side, you need to explain one of the reasons why some may prefer to use supply-side policies.
Provide one example of a supply-side policy and explain why and how it causes the aggregate supply to shift.

Answer 1

Because usually supply can't be increased in Shortrun. To avoid inflation etc only demand policies are available. One such policy is contractionary monetary policy. It will shift Aggregate demand curve leftwards and thus reduce inflation and overheating of economy

We may prefer to use supply side factors because it is real values like supply of goods which matters in longrun. Aggregate demand policy can't increase supply in real sense. It causes aggregate demand to shift rightwards and thus raise output and lower prices