What Was The Result Of Trickle Down Economics?

Trickle-down economics assumes that, with more cash-flow available, business owners will expand their efforts and investors will buy more assets like stocks and bonds. As a result, the additional economic activity at the top level trickles down into the broader economy.

Which is the best description of trickle down economics?

Trickle-down economics, also known as trickle-down theory or the horse and sparrow theory, is the economic proposition that taxes on businesses and the wealthy in society should be reduced as a means to stimulate business investment in the short term and benefit society at large in the long term.

When did trickle down theory start to be used?

History and usage. The Merriam-Webster Dictionary notes that the first known use of "trickle-down" as an adjective meaning "relating to or working on the principle of trickle-down theory" was in 1944 while the first known use of "trickle-down theory" was in 1954.

Why did the Reagan administration believe in trickle down economics?

Faith in trickle-down economics The success of the Reagan administration’s theory was reliant on the idea that the private business sector would grow so substantially, it would make up for any loss of revenue caused by reducing income tax.

How does demand side theory relate to trickle down theory?

Demand-side theorists believe in subsidies and tariffs, whereby the wealthy need protections to keep paying their employees or to raise spending. The trickle-down theory starts with a corporate income tax reduction as well as looser regulation. Also, wealthy taxpayers may get a tax cut, meaning the top income brackets get lowered.

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