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Supply-Side Economics

Supply-side economics is a general term applied to scholars in the field of macroeconomics who believe that the reduction of income tax will bring more tax revenue for the state. They argue that a lower tax rate leads to the expansion of economic activities because it provides incentives to businesses. Faced with extra revenue, the private sector prefers to use this money to increase their economic output by hiring more people, increasing productivity as they grow in size. In return, the state obtains more revenue from larger firms that produce more goods (hence supply-side) with higher productivity. Supply-side economists have been overseeing economic recovery of the Reagan era and influenced policies of George W. Bush. After the economic crisis of 2008, supply-side economists came out ...

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