Supply-Side Economics

About

Supply-side economics is a macroeconomic theory that emphasizes the role of supply in driving economic growth. It suggests that increasing the production of goods and services is key to boosting economic activity. This approach focuses on policies like tax cuts and deregulation to encourage businesses to produce more, invest, and hire more workers. By reducing corporate and income taxes, businesses have more capital to reinvest, expand operations, and increase employment, which in turn can stimulate demand and overall economic growth. The theory gained prominence during the Reagan era as "Reaganomics" or "trickle-down economics." It contrasts with demand-side theories like Keynesian economics, which focus on government intervention to boost aggregate demand. Supply-side economics aims to reduce barriers to production, believing that a free market can efficiently allocate resources. While it has been criticized for potentially exacerbating income inequality and not addressing demand adequately, it remains a significant economic policy framework.