In support of supply-side policies, By Uddin Ifeanyi

While an increase in disposable income (unsupported by productivity growth) may serve to pull in investment that will supply an increase in demand, structural impediments to an economy’s supply responses inevitably mean that this new money more likely results in an increase in prices. This is the main inflationary argument against excessive fiscal or monetary stimulus: domestic prices go up when aggregate demand rises faster than the economy’s ability to produce goods and services.