Supply-side economics Supply-side economics Supply-side economics is a macroeconomic theory arguing that economic growth can be most effectively created by lowering taxes and decreasing regulation, by which it is directly opposed to demand-side economics. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices and employment will increase. It was started by economist Robert Mundell during the Ronald Reagan administration. The Laffer curve is one of the main theoretical constructs of supply-side economics, the idea that lower tax rates when tax level is too high will actually boost government revenue because of higher
Contract curve the initial allocations. The analysis cannot say which particular point along the contract curve they will end up at — this depends on the two people's bargaining skills. In the case of two goods and two individuals, the contract curve can be found as follows. Here formula_1 refers to the final amount of good 2 allocated to person 1, etc., formula_2 and formula_3 refer to the final levels of utility experienced by person 1 and person 2 respectively, formula_4 refers to the level of utility that person 2 would receive from the initial allocation without trading at all, and formula_5