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Actions Of The Government And The Increase In Prices
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 GDP.
When taxes are increased that the amount of disposable income that is available
to consumers is lowered. This lowered level of disposable income leads to a
decrease in consumption spending as well as a decrease in savings. This
decrease in consumer and government spending ....
Word count: 823 - Page count: 3
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