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10 marksBasic Keynesian Models

CAPE Economics Unit 2 · 2017 · Paper 2 · Question 1(d)

Using a standard 45° Keynesian cross diagram, explain how equilibrium is reached between actual expenditure (AE) and income (Y).

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Other parts of this question

  1. 1(a)(i)State TWO determinants of investment.[2 marks]
  2. 1(a)(ii)Distinguish between 'gross domestic product' (GDP) and 'gross national product' (GNP).[4 marks]
  3. 1(b)(i)Describe the income approach used to measure GDP.[3 marks]
  4. 1(b)(ii)Describe the expenditure approach used to measure GDP.[3 marks]
  5. 1(c)Explain ONE way in which growth in a country's GDP may negatively impact the country's standard of living.[3 marks]

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