All Subjects



AP Gov



Unit 4

4.9 Ideology and Economic Policy

1 min readjune 8, 2020

Isabela Padilha Vilela

Economic Issues 

Economy is an important factor for the citizens when deciding who to vote for in the next elections. Depending on the economic situation of the country, citizens express their support or dissatisfaction with the economic policies. 
Most Democratic economic policies favor the idea that the government should have a great interference in these issues. On the other hand, Republicans think that the less interference, the better! Due to this disparity in economic beliefs, each political party follows a different approach to economic issues. 

Important Terms

  • Fiscal Policy 
It is the way that the government manages the economy through taxes, borrowing and spending money. Democrats usually support a progressive tax policy, whereas Republicans want to decrease the amount of tax citizens pay. 
  • Monetary Policy 
The way the government influences the economy through money supply and interest rates. 
  • Laissez-Faire 
Theory created by Adam Smith that states that the government should have the least amount of interference in the economy. 
  • Keynesian Economics 
Consists on stimulating growth in order to stabilize the economy. Government spending should increase during slumps. 
Some economic issues are still topics of debate among parties, such as the minimum wage. Throughout the years, it is possible to affirm that the Republican party is very opposed to increasing the minimum wage, whereas the Democrats are mostly in favor of raising it. 💰💸
Watch AP Gov teacher Allison Powell review this key topic here.


Was this guide helpful?

🔍 Are you ready for college apps?
Take this quiz and find out!
Start Quiz
FREE AP gov Survival Pack + Cram Chart PDF
Sign up now for instant access to 2 amazing downloads to help you get a 5
Browse Study Guides By Unit
Exam Skills (MC, FRQ)
Free Response Questions (FRQ)
Multiple Choice Questions (MCQ)
Unit 1: Foundations of American Democracy
Unit 2: Interactions Among Branches of Government
Unit 3: Civil Liberties and Civil Rights
Unit 5: Political Participation
Join us on Discord
Thousands of students are studying with us for the AP US Government exam.
join now
💪🏽 Are you ready for the US Gov exam?
Take this quiz for a progress check on what you’ve learned this year and get a personalized study plan to grab that 5!
Hours Logo
Studying with Hours = the ultimate focus mode
Start a free study session
📱 Stressed or struggling and need to talk to someone?
Talk to a trained counselor for free. It's 100% anonymous.
Text FIVEABLE to 741741 to get started.
© 2021 Fiveable, Inc.