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Class Test Questions The Class Test will be held on Thursday of Week 10, 2-3 in R401. Those unable to make this time due to timetable clashes should contact Fiona to make alternative arrangements. 1/ With reference to the basic Keynesian model, explain how a specific change in income will restore equilibrium following a fall in investment spending. Outline what would occur in the labour market with respect to wages and employment. 2/ Derive the ‘Classical’ aggregate supply curve and set out what would happen to aggregate supply, real wages and employment if there is a sudden influx of migrant workers. Outline the role that the rate of interest plays in the Classical Model.
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