Paul De Grauwe posted: "Yes, it's the economy, stupid, but is it supply or demand?" on January 24, 2014 for CEPS comment. According to Paul De Grauwe, politicians are trying to fight the problem with the “wrong medicine”, as he calls it. Explain how before the 1970s economists focused on controlling demand; then, when a supply shock occurred in the 1970s, they were unprepared for the blow. Because of this unexpected supply shock, economists began to develop several supply-side models that would hopefully combat this problem and prevent it from happening again. However, with the corrections due to the supply shock, they no longer focused on demand, and this resulted in a demand shock in 2008, where repeated errors occurred. François Hollande is said to believe in the power of the free market and that "...supply-side economics together with the rejection of demand management is based on an ideological premise that markets have self-regulatory characteristics and that unemployment therefore it automatically disappears..." ( Grauwe 4) Before the 1970s, economists focused on controlling demand, believing that supply was flexible enough to always adapt to demand. Demand is the relationship between price and quantity demanded; all other things constant. Before the 1970s, the macroeconomic models created, known as Keynesian models, were meant to indicate how to control demand, to keep it stabilized so that a country did not slip into a deflationary period. They expected a demand shock, but instead, in the 1970s, they experienced a supply shock. A negative supply shock, as in the case, occurs when production costs increase and the quantity supplied decreases and any aggregate price level. Politicians, however, claimed that it was a negative demand shock, and tried to combat... middle of paper... demand shock and supply shock theories. “Yes, it's the economy, stupid, but is it supply or demand?” was published on January 24, 2014 by Paul De Grauwe for CEPS Commentary. The “wrong medicine”, as De Grauwe says, continually runs into problems, but never seems to solve them properly. Before 1970, the focus was on demand shock , in 1970 the focus was on the demand shock for a supply shock and in 2008-2009 the focus was on the supply shock for a demand shock The development of different models to try to predict shocks has begun supply-side model creation began to replace the Keynesian model. By repeating old mistakes, it seemed in 2008 that economists had learned nothing from the 1970s. Economists don't always seem to learn from old mistakes, but in the end, a Sometimes it takes several repetitions and misdiagnoses to get things right.