MBAE-103: Managerial Economics – Unit 11
Objectives: explain the concepts of aggregate demand and aggregate supply; identify the factors influencing agyegate demand and aggregate supply; explain the Classical approach to determination of equilibrium output and prices; and explain the Keynesian approach to determination of eqdibrium output and prices.
Materials:
The relevant material is available here.
Questions:
- Explain the important features of consumption function.
- In the Keynesian model, what is aggregate demand? How does a change in aggregate demand affect output?
- With an example explain the concept of investment multiplier.
- Distinguish between the classical and Keynesian models of output and price determination in terms of demand and supply curves.
- Explain the interaction between household and firms through a circular flow diagram.