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Unemployment benefits generally produce a high multiplier effect because recipients are likely to spend all of the money quickly.
Using expansionary fiscal policy to shift AD during a recession can reduce the time required to achieve full employment. The tradeoff of such policies is potential inflation, although the effect is small when used in a deep recession.
Using expansionary fiscal policy to shift AD during a recession can reduce the time required to achieve full employment. The tradeoff of such policies is potential inflation, although the effect is small when used in a deep recession.