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8 marksClassical Models of the Macroeconomy

CAPE Economics Unit 2 · 2007 · Paper 2 · Question 2(a)

Question 2 covers aggregate demand and supply, investment volatility, saving, and Keynesian macroeconomic equilibrium.

State four major determinants of aggregate demand.

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Other parts of this question

  1. 2(b)State four major determinants of aggregate supply.[8 marks]
  2. 2(c)Discuss three factors that account for the volatility of investment.[9 marks]
  3. 2(d)Explain the relationship between 'saving' and 'investment'.[5 marks]
  4. 2(e)Using the standard Keynesian 45° diagram, explain the difference between inflationary and recessionary gaps.[20 marks]

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