Equilibrium Topic Index

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Data Connections and Additional Resources
Money Supply (M2)

The Federal Reserve strives to maintain stability in financial markets, and the concept of equilibrium is closely related to this goal of stability. Equilibrium in the money market occurs at an interest rate where money supply equals money demand.

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Real Per-Capita Disposable Income

In July 2001 President Bush signed into law a $1.35 trillion tax cut that reduced marginal tax rates across the board. The President said that the tax cuts would help boost the economy, which was in recession at the time. For normal goods, an increase in disposable income is expected to cause an increase in demand. If individual product markets were previously in equilibrium, then the increase in demand caused by the tax cut is expected to result in a new equilibrium in individual product markets. This new equilibrium will feature a larger equilibrium quantity and price.

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