Question

In order to counter the current recession, Congress increases welfare and unemployment transfers. What is the short-run impact of the government's actions on price level and output

Answer 1

Decrease Increase

Step-by-step explanation:

Answer 2

Answer: Price level decreases and output increases in short- run aggregate.

Explanation:

Short-run aggregate can be defined as the decrease in the price level. It affects the production costs and also include the taxes in the product cost. The price of subsides, price of labor or wages and price of raw materials remain unaffected by this. Output also increases in this. So in case of short run impact of the recession the output increases and prices of goods and services decreases.