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In the classical model, what are the effects of an increase in government spending?
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- Please answer the following question. Thanks! Consider a classical economy described as follows: ? = ?^(1/2)?^(1/2) , where L is the amount of labor and K is the amount of capital. The economy has 10,000 units of labor and 10,000 units of capital. Consumption (C): 5,020-100r, Investment (I) : 2,000-100r, Taxes (T): 2,500, Government Purchases (G) :3,000in the keynesian model, an increase in government spending increasesWhat policy changes would Keynes recommend to counteract a recession?
