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3 marksClassical Models of the Macroeconomy

CAPE Economics Unit 2 · 2008 · Paper 2 · Question 2(a)(i)

Based on the classical model where equilibrium can still feature some unemployment.

State the level of unemployment referred to in the statement that some amount of unemployment still exists when the economy is in equilibrium.

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Other parts of this question

  1. 2(a)(ii)Draw a graph showing equilibrium employment.[9 marks]
  2. 2(a)(iii)On the same graph, show disequilibrium unemployment.[3 marks]
  3. 2(b)Explain why disequilibrium employment exists according to the classical model.[5 marks]
  4. 2(c)Explain how, according to the classical view, the economy goes back to equilibrium employment from a position of disequilibrium.[10 marks]
  5. 2(d)Describe FOUR types of unemployment.[20 marks]

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