According to the Keynesian school, how should policy makers respond to a fall in aggregate demand? Briefly
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Question:
- According to the Keynesian school, how should policy makers respond to a fall in aggregate demand? Briefly explain why (3 marks)
- According to the Monetarist school, how should policy makers respond to a fall in aggregate demand? Briefly explain why (3 marks)
- When faced with the 2020 COVID-19 crisis, policy makers around the world responded with a blended policy which followed the recommendations of both schools of thought. Briefly explain why they would have done this (4 marks)
Question 2
- Why does the composition of a country's capital stock impact its economic growth potential (5 marks)
- How does the shape of a country's population pyramid affect its potential GDP growth? (5 marks)
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