Policy and principles of microeconomic

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Suppose that the economy is already in recession, and both President and Congress have declared to do something to restore the economy. Both agree that decreasing taxes would not be a good idea, but do believe that it is in the best interest of the economy to raise government expanding in defense, education & infrastructure.

The President and Congress change budget accordingly, but after 18 months, GDP only increased by three quarters of the expected amount. What factors might be responsible for this condition?

Reference no: EM1373325

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