What is the main premise of supply-side economics?

The main premise of supply-side economics is centered on the belief that economic growth can be most effectively fostered by lower taxes and reduced regulation. By implementing tax cuts, supply-side economics aims to incentivize individuals and businesses to invest more in capital and expand production. This perspective posits that when people keep more of their earnings due to lower tax rates, they have more disposable income to spend and invest, which can lead to increased overall economic activity and growth.

Additionally, deregulation is emphasized as a way to reduce barriers for businesses, allowing them to operate more efficiently and innovate without excessive government intervention. This combination of tax cuts and deregulation is believed to spur investment, increase productivity, and ultimately enhance economic growth, leading to a more prosperous economy.

In contrast, other options emphasize different strategies, such as increasing tax rates or focusing on consumer demand, which do not align with the core tenets of supply-side economics.