Quelpr
9 marksMonetary Theory and Policy

CAPE Economics Unit 2 · 2006 · Paper 2 · Question 2(b)(ii)

Using aggregate demand and aggregate supply curves to illustrate impacts in the short run.

Using aggregate demand and aggregate supply curves to illustrate your points, discuss the impacts on price level (P) and equilibrium GDP (Y) in the short run of an increase in the money supply during a period of high unemployment and excess industrial capacity.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 2(a)(i)Explain the meaning of Aggregate demand.[3 marks]
  2. 2(a)(ii)Explain the meaning of Aggregate demand curve.[3 marks]
  3. 2(a)(iii)Explain the meaning of Aggregate supply.[3 marks]
  4. 2(a)(iv)Explain the meaning of Aggregate supply curve.[3 marks]
  5. 2(a)(v)Explain the meaning of Equilibrium price level.[3 marks]
  6. 2(b)(i)Using aggregate demand and aggregate supply curves to illustrate your points, discuss the impacts on price level (P) and equilibrium GDP (Y) in the short run…[9 marks]
  7. 2(b)(iii)Using aggregate demand and aggregate supply curves to illustrate your points, discuss the impacts on price level (P) and equilibrium GDP (Y) in the short run…[9 marks]
  8. 2(c)Explain how the variability of profits and expectations contribute to the instability of investment.[8 marks]

More practice: the rest of this paper · more Monetary Theory and Policy questions · all CAPE Economics Unit 2 past papers