Answer to Question #12219 in Macroeconomics for sandy

Question

Economically, what is the difference between a supplier side and a stimulate side approach to stimulating the economy?

Answer 1

Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply)
goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. According to
supply-side economics, consumers will then benefit from a greater supply of
goods and services at lower prices. Typical policy recommendations of
supply-side economists are lower marginal tax rates and less regulation.
The Laffer curve embodies a tenet of supply side economics: that government tax revenues are the same at 100% tax rates as at 0% tax rates. The tax rate that
achieves highest government revenues is somewhere in between. Whether it is
worth the corresponding decrease in economic growth that is often assumed by
supply-side economists to accompany such a rate increase is a policy
question.^[2]
The term "supply-side economics" was thought, for some time, to have been coined by
journalist Jude Wanniski in 1975, but according to Robert D. Atkinson's Supply-Side Follies ^[3] [p. 50], the term "supply side" ("supply-side fiscalists") was first used by Herbert Stein, a former economic adviser to President Nixon, in 1976, and only later that year
was this term repeated by Jude Wanniski. Its use connotes the ideas of
economists Robert Mundell andArthur Laffer. Today, supply-side economics is compared by critics to "trickle-down economics".