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The original equilibrium price is $3.00 and the equilibrium quantity is 100. The government then levies a tax of $0.50 on the sellers. This leads to a new supply curve which is shifted upward by $0.50 compared to the original supply curve. The new equilibrium price will sit between $3.00 and $3.50 and the equilibrium quantity will decrease.
A government-set minimum wage is a price floor on the price of labour. A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, [26] good, commodity, or service. A price floor must be higher than the equilibrium price in order to be effective. The equilibrium price, commonly called ...
There is a lot of government spending. The expectation that inflation will rise often leads to a rise in inflation. Workers and firms will increase their prices to 'catch up' to inflation. There is excessive monetary growth, when there is too much money in the system chasing too few goods. The 'price' of a good will thus increase.
Now, Trump has said he plans to impose a 60% tax on goods from China and a 10% to 20% levy on all of the $3 trillion in foreign goods the U.S. imports annually.
A price ceiling is a government- or group-imposed price control, or limit, on how high a price is charged for a product, commodity, or service. Governments use price ...
Investors prefer the higher-yielding bond and therefore push down the value of the lower-yielding bond so that its yield to maturity is more comparable to the newly issued, higher-yielding bond.
Many governments have enacted extremely stiff wage and price controls in the wake of hyperinflation, but this does not prevent further inflation of the money supply by the central bank, and always leads to widespread shortages of consumer goods if the controls are rigidly enforced.
Contractionary fiscal policy, on the other hand, is a measure to increase tax rates and decrease government spending. It occurs when government deficit spending is lower than usual. This has the potential to slow economic growth if inflation, which was caused by a significant increase in aggregate demand and the supply of money, is excessive.