The central aim of the supply-side economic policies of the Reagan administration was to:

The central aim of the supply-side economic policies of the Reagan administration was to:

• A. increase the exchange value of the dollar.
• B. stimulate business investment.
• C. increase the purchasing power of consumers.
• D. raise the real wages of working people.

Answer: (B)

Supply-side economics centers on expanding the economy’s productive capacity by encouraging businesses to invest, produce, and hire through policies like tax cuts and deregulation. Reagan-era policies aimed to raise after-tax returns on investment, prompting more business spending on capital, research, and expansion. That focus on stimulating investment directly targets growth in production and jobs, which is why this option is the best fit. Increasing the exchange value of the dollar isn’t the core goal of supply-side policy, even though a stronger economy can influence currency values. Increasing purchasing power of consumers can be a consequence of tax cuts, but it isn’t the main objective—tax cuts and deregulation are intended to spur investment and output. Raising real wages might follow from higher productivity and lower unemployment, but it isn’t the primary aim of these policies.

Supply-side economics centers on expanding the economy’s productive capacity by encouraging businesses to invest, produce, and hire through policies like tax cuts and deregulation. Reagan-era policies aimed to raise after-tax returns on investment, prompting more business spending on capital, research, and expansion. That focus on stimulating investment directly targets growth in production and jobs, which is why this option is the best fit.

Increasing the exchange value of the dollar isn’t the core goal of supply-side policy, even though a stronger economy can influence currency values. Increasing purchasing power of consumers can be a consequence of tax cuts, but it isn’t the main objective—tax cuts and deregulation are intended to spur investment and output. Raising real wages might follow from higher productivity and lower unemployment, but it isn’t the primary aim of these policies.