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LEARNING OBJECTIVES
After you have read this section, you should be able to answer the following questions:
How did the perspective of Keynes differ from the “classical theory” of the macroeconomy?
How does a decrease in aggregate spending lead to a reduction in real gross domestic product (real GDP)?
Can a decrease in consumption explain the Great Depression?
Can a decrease in investment explain the Great Depression?
Now that we understand the components of aggregate spending, we can consider whether a decrease in one or more of these components can explain the Great Depression.
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