Question

Question 1 Unsaved What did Reagan believe about the economy as the basis for Reaganomics? Question 1 options: the emergence of internet companies would lead to the “dotcom bubble” the federal deficit would shrink if the American people paid more taxes if the American people had more money in their pockets, they would be more likely to save it instead of spending it the economy would improve if Americans had more money to spend

Answer 1

The correct answer is "the economy would improve if Americans had more money to spend."

The basic of Reaganomics deals with what is known as Side-Supply Economics. This concept revolves around the idea that cutting taxes would lead to more capital for businesses. This increased amount of capital (aka money) available would allow them to hire more workers, who would produce more goods. If there are more individuals working, than they will have money to spend on goods/services. Also known as the "Trickle down theory" this concept heavily influenced Reagan's economic policies.