Final answer:
Ronald Reagan's 'trickle-down' economics, or Reaganomics, was an economic policy that reduced taxes on the wealthy, aiming to stimulate investment, job creation, and overall economic growth. Critics argued it increased wealth disparity and incentivized overseas investment.
Step-by-step explanation:
The idea behind Ronald Reagan's "trickle-down" economics, commonly referred to as Reaganomics, was based on supply-side economics. This economic policy aimed to stimulate economic growth by reducing taxes on the wealthy and businesses, with the expectation that the benefits would eventually "trickle down" to the rest of the economy in the form of job creation and investments. It also sought to limit government spending, especially on social programs, and increase defense spending. The belief was that lower taxes would encourage the wealthy to invest more, leading to greater economic activity that would ultimately benefit all income levels. Advocates of this policy pointed to the tripling of the Dow Jones Industrial Average and reductions in inflation and unemployment during the 1980s as signs of success, whereas critics highlighted the growing wealth disparity and the tendency for corporations to invest overseas.