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  • Actions of The Fed at Full Employment in Long Run Equilibrium

     

    Essays1 Law

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ID number:127884
Evaluation:
Published: 10.04.1997.
Language: English
Level: Secondary school
Literature: n/a
References: Not used
Extract

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 causes the tot…

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