Supply side economics

Supply side Eco - belief that as curve will determine levels of inflation, unemployment, and economic growth 

To increase the economy shift the as curve to the right.

They focus on the marginal tax rate 

Marginal tax rate - amount paid on the last dollar earned. For each additional dollar earned 

Lower taxes are an incentive for a business to invest into the economy 

Lower taxes are an incentive for workers to work hard, thereby becoming more productive

Lower taxes are an incentive for people to increase saving, there for create lower interest rate which causes an increase in business investment 

Supply side support policy that promote GDP growth

By arguing that high marginal tax rates along with with current system or transfer payments, such as unemployment compensation or welfare programs provide disc incentivize to work, invest, innovate, and undertake entrepreneur adventures 

Reagan economics 

Laffer  curve- trade off between taxes 

Used to support supply side argument 

As tax rates increase from 0, tax revenue from 0 to some maximum level and then decline  

3 critics   

1. Research suggest impact of tax rate on incentives, to work, save, and invest are small 

2. Tax cuts also increase demand which can fuel inflation,  thus creating a situation where demand exceed supply

3. Where the economy is actually

Located on the curve is difficult to

Determine .