Video: Supply-Side Economics in Fiscal and Monetary Policy (9.36)

1st October 2015
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Stimulating the Supply Side of the Economy

In 1980, Ronald Reagan was elected to the office of the President by a landslide. His major campaign promise was to shrink the size of government and lower taxes so businesses could invest and help the economy grow. His tax cut was the largest in history. The highest marginal tax bracket was reduced from 70% to 28%, while the highest tax rate that corporations paid decreased from 48% all the way down to 34%. Reagan also promised to slow the growth of the money supply in order to reduce inflation. Thatcher and Reagan became good friends – their economic policies both emphasised supply-side reforms (which included tax cuts).

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Source: study.com

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