Policy interventions can influence market equilibrium from "summary" of Business Cycles and Equilibrium by Fischer Black
Policy interventions, such as government regulations or fiscal stimulus, have the power to disrupt the natural state of market equilibrium. In a perfectly competitive market, prices adjust to ensure that demand equals supply, resulting in an optimal allocation of resources. However, external factors such as government intervention can distort this balance. For example, if the government imposes price controls on a certain good, it can artificially lower or raise the price of that good, leading to either a shortage or surplus in the market. This disrupts the equilibrium price and quantity, causing inefficiencies in the allocation of resources. Similarly, fiscal stimulus m...
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