Mock Analytical Questions for Mid term 2

1. Briefly explain how an economy moves itself out of a recessionary gap using:

1. Classical economists point of view.

2. Keynesian AD-AS and/or TE-TP Framework.
3. Fiscal Policy

2. Explain how an inflationary gap is being taken into consideration using:

1. Classical Economists point of view.

2. Fiscal Policy

3. Briefly explain how fiscal policy can destabilize an economy.

4. Explain crowding out. Differentiate between direct and indirect crowding out.
Explain the difference between zero, partial and incomplete crowding out.

5. What role does government have in Keynesian AD-AS/TE-TP framework?

6. What are the basic differences between Classical and Keynesian school of
economic thought?