is a theory according to which the government gives huge tax reductions and other benefits to big investors and corporate sectors, so that the money saved by them eventually gets invested in their firm and slowly trickles down to lower sections of the sector.Supply side economics is the exact opposite of the Keynesian theory that failed. The Keynesian theory is based on the supply demand principle, wherein the demand is increased so as to increase the price cum profit of goods and services. On the other hand, supply side economics is based on the theory that more supply will eventually bring out more demand and will lead to a steady profit margin.

The major effect of supply side economics is the tax reduction. Now the common question arises that if less tax is collected then how is it more profitable to the government as whole. According to this theory, less tax means more buying capacity and purchasing power for the people. In other words, fewer taxes eventually mean more money in the market. And more money in the market implies to the growth of a stronger economy, which in turn will result in better revenue collection for the government. Basically, supply side economics is beneficial to each and every person in the system, but the benefits are visible only in the long run. So, even though it may not show immediate effects, it is more profitable to the people (initially), the government (indirectly), and eventually, the whole economy.

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