Which statement best describes supply-side economics?

Which statement best describes supply-side economics?

A) Tax increases encourage borrowing from banks, which leads to greater purchasing power.

B) Tax cuts give more money to investors and consumers, which leads to overall economic growth.

C) The government establishes production goals for businesses, which leads to higher-priced goods.

D) The government increases revenue to offset federal and state spending, which leads to a balanced budget.

Answer: Tax cuts give more money to investors and consumers, which leads to overall economic growth.

Supply-side economics derives from the idea that less tax and deregulation will lead to the rapid economic development. The suggestion is that if taxes are reduced, people and businesses will have more money to save, invest and spend. This rise will lead to an expansion of the economy capacity to produce (the supply side). More and more goods and services will be made available for the consumers, and they will have to access prices falling on the one hand, better choices on the other. Supply-siders put forward the theory that the best method to trigger the economic growth is the policies like tax cuts, which are the part of the supply-side policies while demand-side politics are failed in that. Supply-side economics seeks to stimulate overall growth and prosperity of an economy by putting more money into the hands of investors, business and consumers by way of lower taxes.