Supply-Side Policies

Definition

Supply-side policies are government measures designed to improve long-term economic growth by increasing aggregate supply. These policies focus on factors such as reducing taxes on businesses, promoting investment in physical and human capital, deregulation, and fostering innovation.

Related terms

Laffer Curve: Refers to the graphical representation of the relationship between tax rates and tax revenue. It suggests that at a certain point, increasing tax rates may lead to a decrease in revenue due to disincentives for work and investment.

Deregulation: Refers to the removal or reduction of government regulations on businesses with the aim of promoting competition and efficiency.

Tax Incentives: Refers to special deductions, exemptions, or credits provided by governments as incentives for specific economic activities or behaviors.