Knowra Supply-side economics Supply-side economics Supply-side economics is an approach that emphasizes how incentives, productivity, and productive capacity shape economic growth, often focusing on taxes, regulation, and investment.
Marginal tax rate : The tax rate applied to an additional unit of income or activity. Supply-side arguments focus on how taxes on the next dollar earned may affect work and investment choices.
Demand-side economics : An approach that emphasizes aggregate spending as a driver of output, employment, and economic fluctuations. It gives a different account of how policy can raise output, especially when resources are underused.
Economic growth : An increase over time in the quantity of goods and services an economy produces. Supply-side economics treats growth in productive capacity as a central policy objective.
Classical economics : An economic tradition emphasizing production, markets, prices, and the allocation of resources. Supply-side reasoning inherits classical attention to production and the effects of incentives.
Tax revenue : Government income collected through taxes. A central empirical question is whether lower rates reduce receipts or induce enough activity to offset losses.
Tax incidence : The distribution of a tax’s economic burden among buyers, sellers, workers, and owners. The statutory payer may differ from the person whose incentives or income ultimately change.
Keynesian economics : A macroeconomic tradition emphasizing aggregate demand, price rigidities, and stabilization policy. Its focus on demand management differs from supply-side emphasis on productive incentives and capacity.
Tax reform : A change to the structure, rates, or administration of a tax system. Supply-side proposals commonly alter taxes to change incentives to work, save, or invest.
Arthur Laffer : An American economist associated with the tax-rate and revenue relationship popularized as the Laffer curve. His name became closely linked to the political case for tax-rate reductions.
Income inequality : The unequal distribution of income among individuals or households. Distributional analyses examine who receives gains from policies favoring investment and high-income taxpayers.
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