ECONOMICS 3: ASSIGNMENT 2[100]

QUESTION ONE(25) Assume an economy experiences inflationary pressures which cause input prices of goods and services to increase.

In terms of the above statement, discuss with the aid of the aggregate demand -aggregate supply model, the type of fiscal policy that can be implemented to combat the negative impact of this situation.

QUESTION TWO(30) Fully discuss the aggregate demand approach to measuring aggregate expenditure. Include in your answer a critique of this model.

QUESTION THREE(30) List and discuss at least three (3) general policies that can be implemented by government to reduce unemployment in an economy.

QUESTION FOUR(15) Explain the nature of the conflict that is related to the Philips curve. Use a diagram to substantiate your answer.