Supply-Side Economics
Created: 2022-12-27
Status: #soil
Last Edited: 2022-12-27
Topic: economics
???
Supply-side economics is an economic theory that focuses on how the supply of goods and services affects economic growth.
It holds that increases in the supply of goods and services will lead to increased economic activity and increased economic growth. Supply-side economics emphasizes the importance of increasing production, reducing taxes, and reducing government regulations in order to stimulate the economy.
Supply-side economists believe that if production costs are lowered, businesses will be able to hire more workers, which will increase demand for goods and services. This, in turn, will lead to higher levels of economic growth.
What are the major criticisms of supply-side economics?
The major criticisms of supply-side economics are that it is overly simplistic, ignores the role of demand in the economy, and can lead to excessive government deficits.
Critics argue that cutting taxes and reducing regulations will not necessarily lead to increased economic growth. They point out that supply-side policies can be used to benefit the wealthy, while leaving the average person worse off. (inequality)
In addition, supply-side economics tends to ignore the role of demand in economic growth. It assumes that increased production will automatically lead to increased demand, which is not always the case. The result can be an imbalance between production and demand which causes prices to rise and economic growth to slow down.
The Mini Budget in 2022 under the short lived leadership of Liz Truss was based on ideas of supply-side economics.