>". Economies can and often do suffer from an overall lack of demand, which leads to involuntary unemployment 

1) Human greed is unlimited. There is never a lack of demand in the aggregate. Only overly optimistic expectations of profit margins.

2) Note that "involuntary unemployment" is also a euphemism for unsatiated demands.

>". Government policies to increase demand, by contrast, can reduce unemployment quickly 
>". Sometimes increasing the money supply won't be enough to persuade the private sector to spend more, and government spending must step into the breach

3) Yes. For example, large governments orders for buggy whips could indeed be helpful in getting folks back to work. 

Hugh