Actions Of The Government And The Increase In Prices
Beginning of paper
The United States economy is currently producing at a level of full
employment in long-run equilibrium. The government then decides to increase
taxes and to reduce government spending in an effort to balance the budget. The
results of the actions taken by the government is the decrease of real G ....
Middle of paper
.... of goods and falling
prices consumption becomes more desirable to consumers and the level of consumer
spending rises. The fall in prices causes business to become less profitable
and producers decrease the level of production. This results in the decrease of
the aggregate quantity supplied to decrease. This continues until aggregate
quantity demanded equal the aggregate quantity supplied and a period of short-
run equilibrium is established. The real GDP and the price level have both
de ....
------------------
Word count: 823
Page count: 3 (approximately 250 words per page)
