Supply Side of Economics

Supply side Economics/ Reaganomics:

• to stimulate active policy, to stimulate, to work save and invest
• Includes tax cuts, which increases disposable income

Laffer curve: it displays the theoretical relationship between tax rates and government revenue

Criticisms of the Laffer Curve:

1. Empirical evidence suggests that the impact of tax rates on incentives to work, save, and invest are small. 
2. Tax cuts also increase demand which can fuel inflation 
3. Where the economy is actually located on the curve is difficult to determine 9w