Supply Side Economics Stagflation the simultaneous occurrence of high inflation and unemployment © 2012 McGraw-Hill Ryerson Limited12- 1 LO4.

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Presentation transcript:

Supply Side Economics Stagflation the simultaneous occurrence of high inflation and unemployment © 2012 McGraw-Hill Ryerson Limited12- 1 LO4

Supply Side Economics AD policies failed to cure stagflation led to revival of neoclassical view that AS was a prime mover of economic activity supply-siders believed high levels of taxation and excessive regulation had also decreased AS © 2012 McGraw-Hill Ryerson Limited12- 2 LO4

Supply Side Economics Supply Side Policies privatization of Crown corporations deregulation of the regulated industries contracting-out of many government services reduction of tax rates © 2012 McGraw-Hill Ryerson Limited12- 3 LO4

Laffer Curve A curve showing that in terms of tax revenue, there is an optimal tax rate; above or below this rate, tax revenue would be lower © 2012 McGraw-Hill Ryerson Limited12- 4 LO4