Please include clearly labelled diagrams.

28 (0) Draw a diagram to show the profit maximising price and output of a firm with a kinked demand curve in an oligopoly market. The curves in the diagram should be labelled: MR for marginal revenue, AR for average revenue, MCfor marginal cost. Price and quantity should be labelled P1 and Q1 respectively. ii) Explain why the demand curve is kinked Define the following: (a) the IS curve (b) the LM curve (ii) Using an IS/LM diagram, describe the effect of an increase in government expenditure ( fiscal expansion) on the equilibrium values of the rate of interest and national income. (iii) 30 (i) Explain two potential problems caused by unanticipated inflation. [2] (ii) Explain four potential problems caused by anticipated inflation 30 (0) Explain two potential problems caused by unanticipated inflation. [2] (ii) Explain four potential problems caused by anticipated inflation. 31 (i) In each of the following cases calculate the value of the multiplier assuming that the components of aggregate demand are exogenous and that there are no direct taxes. (a) The marginal propensity to save is 0.4. (b) The marginal propensity to consume is 0.75. [2] (ii) Explain how direct taxes which are proportional to income will affect the value of the multiplier. 32 (i) Explain the meaning of the term economic growth. [1] (ii) Outline the factors which may lead to economic growth