Which of the following is a key characteristic of supply-side economics?

Supply-side economics is primarily focused on stimulating economic growth by increasing the supply of goods and services available in the economy. This is achieved through measures that encourage investments in production, such as tax cuts for businesses and higher-income individuals, deregulation, and other policies that aim to boost capital investment. By enhancing production capabilities, supply-side economics argues that an increase in supply can lead to greater employment, higher wages, and overall economic expansion.

Enhancing production is central to supply-side philosophy, as it posits that when producers are allowed to keep more of their earnings—thanks to lower taxes and fewer regulations—they are more likely to reinvest those profits back into their businesses. This reinvestment can result in increased productivity, innovation, and ultimately, a more robust economy.

In contrast, increased regulation, a focus on labor market changes, and maintaining stable prices, regardless of demand, do not align with the core principles of supply-side economics, as they either impose constraints on production or shift the focus away from investment-driven growth strategies. Thus, encouraging investments to enhance production best encapsulates a key characteristic of supply-side economics.