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Actions Of The Government And The Increase In Prices
Part 1 of Paper
....rium. 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 GDP.
When taxes are increased that the amount of disposable income that is available
to consumers is lowered. This lower.... Part 2 of Paper
....s 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
decreased from the original long-run equilibrium level and the economy is
operating under the full employment level. At this point the U.S. economy is at
a recessionary gap and a monetary policy must be used to pull the economy from
the current recession.
There are three options that the Federal Reserve has to try.... |
| Number of words: 823 - Approximate pages: 3 |
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