Supply-side economics developed during the 1970s in response to the Keynesian dominance of economic policy, and in particular the alleged failure of demand management to stabilize Western economies during the stagflation of the 1970s, in the wake of the oil crisis in 1973. It drew on a range of non-Keynesian economic thought, particularly the Austrian school, e.g. Joseph Schumpeter and Monetarism . The term supply-side economics was coined by journalist Jude Wanniski in 1975 AD, and popularized the ideas of economists Robert Mundell and Arthur Laffer. Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created using incentives for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates. This can be contrasted with Keynesian economics (or "demand side economics"), which argues that growth can be most effectively managed by controlling total demand for goods and serv...

Inflation is a rise in the general level of prices over time. It may also refer to a rise in the prices of a specific set of goods or services . In either case, its measured as the percentage rate of change of a price index . There are many measures of inflation . For example, different price indices can be used to measure changes in prices that affect different people. Two widely known indices for which inflation rates are reported in many countries are the Consumer Price Index (CPI) , which measures consumer prices, and the GDP Deflator , which measures price variations associated with domestic production of goods and services. Related economic concepts with inflation include: deflation, a general falling level of prices; disinflation , a decrease in the rate of inflation; hyperinflation , an out-of-control inflationary spiral; stagflation , a combination of inflation and rising unemployment; and reflation , which is an attempt to raise prices to counteract deflationary pressures.

The doctrine of utilitarianism saw the maximization of utility as a moral criterion for the organization of society. According to utilitarians, such as Jeremy Bentham (1748-1832 AD) and John Stuart Mill (1806-1876 AD), society should aim to maximize the total utility of individuals, aiming for " the greatest happiness for the greatest number ".

The most prominent contemporary development economist is perhaps the Nobel laureate Amartya Sen . Recent theories revolve around questions about what variables or inputs correlate or affect economic growth the most: elementary, secondary, or higher education, government policy stability, low tariffs, fair court systems, available infrastructure, availability of medical care, prenatal care and clean water, ease of entry and exit into trade, and equality of income distribution and how to advise governments about macroeconomic policies, which include all policies that affect the economy.

Education enables countries to adapt the latest technology and creates an environment for new innovations . The cause of limited growth and divergence in economic growth lies in the high rate of acceleration of technological change by a small number of developed countries. These countries’ acceleration of technology was due to increased incentive structures for mass education which in turn created a framework for the population to create and adapt new innovations and methods. Furthermore, the content of their education was composed of secular schooling that resulted in higher productivity levels and modern economic growth .

The origins of modern development economics are often traced to the need for, and likely problems with the industrialization of eastern Europe in the aftermath of World War II. The key authors are Paul Rosenstein-Rodan, Kurt Mandelbaum and Ragnar Nurkse. Only after the war did economists turn their concerns towards Asia, Africa and Latin America. At the heart of these studies, by authors such as Simon Kuznets and W. Arthur Lewis was an analysis of not only economic growth but also structural transformation.

Development Economics is a branch of economics which deals with economic aspects of the development process in low-income countries. Its focus is not only on methods of promoting economic growth and structural change but also on improving the potential for the mass of the population, for example, through health and education and workplace conditions, whether through public or private channels. Thus, development economics involves the creation of theories and methods that aid in the determination of types of policies and practices and can be implemented at either the domestic or international level.This may involve restructuring market incentives or using mathematical methods like inter-temporal optimization for project analysis, or it may involve a mixture of quantitative and qualitative methods.Unlike in many other fields of economics, approaches in development economics may incorporate social and political factors to devise particular plans.