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Keynesian approach to government spending

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Suppose every time there was a demand-side recession, the government responded with increased spending programs (increase in G) and every time there was over-expansion (inflation caused by increase aggregate demand while the economy is at full employment) the government responded with decreases in the money supply. What would the composition of the economy at full employment GDP (C + I + G) look like after a few recessions and over-expansions? Why is that composition problematic for the economy in the long run (especially considering the Keynesian approach to government spending)?

Reference no: EM132813412

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