supply side economics

Definition

Theory that income taxes reduce incentives for work, savings, and investment, and that accelerated economic growth without inflation can be achieved by increasing the supply of goods and services. Supply side economics advocates large scale tax cuts for individuals and corporation, deregulation of businesses, and strong incentives for investment. Based on Say's Law, and supported by classical and monetarist economists, it is however, opposed by Keynesian (demand side) economics which theorizes that aggregate demand constitutes the primary driving and stabilizing forces in an economy. Also called trickle down economics because its proponents believe making the rich richer eventually helps the poor when the benefits of an expanding economy seep down to them. See also Laffer curve and trickle down theory.