Supply Side Economics or Reaganomics (4/24)
- deals with manipulation the AS by enacting policies to stimulate incentives to Work,Save,Invest
- tax cuts = DI↑
- though there could be disincentives
Laffer Curve
- displays the 'theoretical' relationship btwn tax rates and gov't (tax) revenue
- Criticisms of Laffer Curve
- Empirical evidence suggest that impact of tax rates on incentives to work,save,invest are small
- Tax cuts also increase Demand which can fuel inflation
- Where the economy is actually located on the curve is difficult to determine
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