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3 marksBasic Keynesian Models

CAPE Economics Unit 2 · 2021 · Paper 2 · Question 1(b)(iii)

The aggregate expenditure (AE) data for an economy: Consumption (C) = 100 + 0.8 Y, Investment (I) = 300, Government spending (G) = 60.

Calculate the equilibrium level of income.

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Other parts of this question

  1. 1(a)(i)Define disposable income.[2 marks]
  2. 1(a)(ii)Define net national income.[2 marks]
  3. 1(b)(i)Explain the concept of 'double counting'.[3 marks]
  4. 1(b)(ii)Using an example, explain the concept 'marginal propensity to consume'.[3 marks]
  5. 1(c)Discuss THREE limitations of national income accounting.[12 marks]

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