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Problem :
(a) Describe inflation and discuss its origin using Classical and Keynesian theories.
(b) Describe with diagram how can inflation occur in an economy with substantial unemployment of factors of production.
(c) Comment on the effects of inflation in the economy and the measures to control the inflation.
KEYNESIAN VIEW ON UNEMPLOYMENT Keynes in his General Theory presented a view that fluctuations in aggregate demand (AD) influences the equilibrium level of output. Thus
Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2 . Thanks a lot!
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