Which term describes Reaganomics?

• A. Demand-side economics
• B. Keynesian economics
• C. Supply-side economics
• D. Monetarism

Answer: (C)

Reaganomics is described as supply-side economics. The main idea is to boost the economy by increasing incentives to produce goods and services—through tax cuts for individuals and businesses and deregulation—so that investment and production rise, expanding the economy’s capacity. When more is produced, growth can occur not just from higher spending but from a larger, more productive economy, which supporters argue leads to higher tax revenues over time. This emphasis on boosting supply contrasts with demand-side approaches (which rely on government spending to raise overall demand) and with monetarist ideas (which focus on controlling the money supply to curb inflation). So the best term for Reagan’s policy package is supply-side economics.