SUPPLY SIDE ECONOMICS
Refers to government policies that focus on stimulating the economy by boosting the aggregate supply of goods
and services rather than by boosting the aggregate demand for goods and services
It recommended tax cuts for businesses which would boost potential profits and encourage businesses to
It also recommended tax cuts for households. This would boost the rate of return on an hour of work and would
encourage laborers to work more.
POSSIBLE COUNTER ARGUMENT:
If individual tax rates are cut, the disposable incomes of workers increase.
With higher incomes, some workers might choose to work less and enjoy leisure time.
EXAMPLE OF SUPPLY SIDE ECONOMIC POLICY:
“TRICKLE DOWN ECONOMICS”
CUT CORPORATE TAX RATES
This causes after tax profits to increase.