What is the principle of supply-side economics?

The principle of supply-side economics focuses on fostering economic growth primarily through policies that lower taxes and reduce regulations. This economic theory posits that by decreasing the financial burden on businesses and individuals, it encourages investment and production. When taxes are lower, individuals have more disposable income to spend, and businesses have more capital to invest in expansion, hiring, and innovation. The expected result is an increase in supply of goods and services, leading to greater economic growth and job creation.

In contrast, the other options suggest strategies that do not align with the core tenets of supply-side economics. Encouraging government spending may stimulate demand but does not directly address supply-side concerns. Increasing consumer debt could lead to short-term spending but may result in long-term economic issues. Enhancing public services through higher taxes typically aligns more with demand-side economics, which focuses on boosting economic activity through increased government spending rather than giving incentives to produce more.