Answer:
Reaganomics refers to the economic policy that President Ronald Reagan put forward in the 1980s. Reaganomics are associated with the liberal supply-economic theory. The main objectives of Reagan's economic policy were the reduction of government spending, the reduction of federal income and capital gains taxes, the reduction of government regulation (laissez faire) and better control over the money supply in order to reduce inflation.
For the Reagan presidency, the United States experienced a decade in which both unemployment and inflation - a combination called stagflation - increased. In that climate there was a demand for an expansion of the money supply. President Nixon's wage measures and price controls were phased out. Moreover, strategic oil reserves were set up to limit the negative consequences of a possible oil crisis.
Reagan indicated to increase defense spending and at the same time reduced taxes - an approach that differed from his immediate predecessors. He introduced a lower marginal tax burden and simplified the legislation on income taxes. He also continued the trend towards more flexible legislation. A consequence of that policy, however, was that the government had an average annual budget deficit of 4.2% of GDP during Reagan's entire presidency, while under Carter it was only 2.5%. The GDP per capita, calculated for adults, no longer grew by 0.8% per year as under Carter, but by 1.4% under Reagan.
