Read the following extract and answer the questions that follow

And if private employers cannot or will not spend more money on workers, Keynes thought, then the government should step in and spend. Countries are able to make capital investments while paying off debt. Businesses had to cut their spending to get the resources to pay off the bonds. If you read the press, you know this hasn't been working very well."

https://news.mit.edu/2014/book-keynes-global-economy-0916

1. With reference to the Keynesian approach, explain the main components of aggregate demand. (10)

2. With the aid of a diagram and using the Keynesian analysis, explain in detail how income and aggregate spending are affected by the following

a) 'government should step in and spend'

b) A cut in spending by European firms (20)

3. Explain the consumption function for a closed economy with a government sector (10)