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Keynesian Theory •Keynes argued that if people demand a product, producers will supply it. •If aggregate spending isn't sufficient, some goods will remain unsold and some production capacity will be idled.
•Keynesian theory urges increased government spending or tax cuts as mechanisms for increasing aggregate demand (shifting the AD curve back to the right). Keynesian Theory
Monetary Theory •Monetary theories focus on the control of money and interest rates as mechanisms for shifting the aggregate demand curve. •Money and credit affect the ability and willingness of people to buy goods and services.