what is trickle down effect?

Question

hi everyone. i wanna ask a question from economics. what do u mean by trickle down effect. pls help me. i need it for school.

Answer 1

The "Trickle-Down Effect" is the basis of "Supply Side Economics." The whole idea behind it is the creation of jobs. How do you do this?

Supply siders maintain that jobs are created by accumulated wealth. If you give tax breaks to the poor, they maintain, the poor will only spend it. If, on the other hand, you give more tax breaks to the wealthy, the wealthy will invest that money in new enterprises that will strengthen the economy and grow jobs.

The "trickle-down" effect is that if you give money to the rich, the benefits will "trickle-down" to the working poor in the form of new jobs. It should be noted that the term "trickle-down" is used as an insult only by those who are opposed to supply-side economics.

Answer 2

The trickle down effect is the idea that if the wealthy have money, they will either spend it on goods and services, or they will invest it in industry. Either way, the idea is that if you give a tax cut to the rich, it will "trickle down" to the working poor, who are employed by industry or working to provide the goods and services. So if a millionaire couple get a thousand dollar tax break, they might go out to eat one more time per week and leave a $5 tip for the waiter to split with the bus boy.

This is associated with the "Supply Side Economics" of Arthur Laffer. The graph he drew to convince people that tax cuts would actually lead to increased revenue for the government is called a Laffer curve. And some people really did laugh, more in horror than amusement, really.

The problem is, of course, that the tax cuts are either financed by cuts to services the poor use--like public schools--or by creating a deficit (when the government spends more money than it has). And the money that trickles down is...just a trickle.

Answer 3

It's giving breaks to the fat cats in the belief that the benefits will trickle down to the lower classes. For example, give a tycoon a tax break and he'll hire more people for his factory. Critics suggest that the rich folks are pretty absorbent and anything that trickles down is dried up, dirty and smelly, economically speaking.

Answer 4

Some sort of Reagan-era bull crap where the rich people get richer and the effect is supposed to "trickle down" to working class people

Answer 5

i always thought it meant one action that makes other reactions down the line