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15 marksBasic Keynesian Models

CAPE Economics Unit 2 · 2013 · Paper 2 · Question 2(b)

Using the Keynesian 45° graph, explain the difference between a 'recessionary gap' and an 'inflationary gap'.

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Other parts of this question

  1. 2(a)Identify the FOUR major determinants of investment.[4 marks]
  2. 2(c)(i)Explain how the Classical school will respond to a recessionary gap.[3 marks]
  3. 2(c)(ii)Explain how Keynesian economists will respond to a recessionary gap.[3 marks]

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