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11 June, 08:24

If an expansionary policy pushes output beyond the full employment level of gdp:

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  1. 11 June, 08:45
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    The natural rate of unemployment will drop in this instance. By increasing spending and/or decreasing taxes, aggregate demand is boosted, leading to more people being employed to meet the demand. This moves the natural rate of employment out to a greater level than previously experienced.
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