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6 marksBasic Keynesian Models

CAPE Economics Unit 2 · 2008 · Paper 2 · Question 1(c)(iv)

How can the gap be closed?

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Other parts of this question

  1. 1(a)Explain the difference between real Gross Domestic Product (GDP) and nominal GDP.[6 marks]
  2. 1(b)Discuss TWO methods of measuring national product.[20 marks]
  3. 1(c)(i)Identify the type of approach used in the provided diagram.[3 marks]
  4. 1(c)(ii)What type of gap exists in the economy shown in the diagram?[3 marks]
  5. 1(c)(iii)How wide is the gap?[2 marks]
  6. 1(d)Calculate equilibrium aggregate income (Y) given: Consumption = .8Y, Investment = 100, Government spending = 80, Exports = 500, Imports = 180.[10 marks]

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