Suppose the economy of Legoland is initially at full employment. Then, government purchases decrease. All else constant, in the short run, the price level in Legoland will _ and eventually pressure will build for wages to _ .

When there is a reduction in the expenditure of the government, this will bring about a reduction in the price level as well as the aggregate demand curve in this case, will shift to the left.

This leads to a reduction in demand and economic growth and in turn, brings about pressure for an increase in wages.

Therefore, all else constant, in the short run, the price level in Legoland will fall and eventually pressure will build for wages to rise.

Suppose the economy of Legoland is initially at full employment. Then, government purchases decrease. All else constant, in the short run, the price level in Legoland will _____ and eventually pressure will build for wages to _____ .

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Suppose the economy of Legoland is initially at full employment. Then, government purchases decrease. All else constant, in the short run, the price level in Legoland will _ and eventually pressure will build for wages to _ .