What is the main focus of supply-side economics?

The main focus of supply-side economics is centered on the idea that reducing taxes and deregulation stimulates growth in the economy. Advocates of this economic theory argue that when individuals and businesses retain more of their income due to lower tax rates, they are more likely to invest in production, leading to job creation and overall economic expansion. This approach posits that supply, or the production of goods and services, drives economic growth, rather than demand. By reducing the regulatory burdens on businesses, supply-side economics aims to foster a more conducive environment for investment and entrepreneurship, thereby increasing the supply of goods and services available in the economy.

In the context of the other options, increasing government spending typically aligns more with Keynesian economic theories, which focus on stimulating demand to encourage growth. Encouraging consumer spending, while important, is not the primary focus of supply-side economics, as it emphasizes the supply side of the economy. Expanding government programs often contrasts with the principles of supply-side economics that advocate for limited government intervention. Thus, reducing taxes and deregulation stands as the cornerstone of this economic approach, emphasizing a belief in the power of free markets to drive prosperity.