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If the Federal reserve agent of any government decided to whoop large amounts of money from the economy this would lead to recession. This means that there will not be enough money in the economy for investments. Lack of investments in the economy will always bring about unemployment. The high unemployment levels then leads to the need of more public spending by government in order to take care of the welfare of the unemployed. On the other hand recession leads to loss of tax by the governments as when there is no money to be invested by firms then government has to lose the tax it used to collect from these firms.
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