(02) it is well established that economic factors affect the popularity of an incumbent. An incumbent chance of reelection may thus depend upon variables such as the unemployment rate, U, and the inflation rate, n, in the year of the election. A simple model that captures this relationship relates the ratio of the votes going to an incumbent relative to those going to the challenger, V, as a function of the unemployment rate and the inflation rate: V = ffu, ni). The assumption is that higher unemployment or higher inflation towers the proportion of vores going to the incumbent. Unemployment rate and inflation rate are expressed as functions of monetary and tax policies as: U=WIM, T) and 1 =p( MT) The assumptions are that expansionary monetary policy lowers unemployment and raises inflation, an Increase in tax increases unemployment and lowers inflation, (a) Analyse the effect of an expansionary monetary policy and (b) a reduction in taxes on the chances of the incumbent (02) it is well established that economic factors affect the popularity of an incumbent. An incumbent chance of reelection may thus depend upon variables such as the unemployment rate, U, and the inflation rate, n, in the year of the election. A simple model that captures this relationship relates the ratio of the votes going to an incumbent relative to those going to the challenger, V, as a function of the unemployment rate and the inflation rate: V = ffu, ni). The assumption is that higher unemployment or higher inflation towers the proportion of vores going to the incumbent. Unemployment rate and inflation rate are expressed as functions of monetary and tax policies as: U=WIM, T) and 1 =p( MT) The assumptions are that expansionary monetary policy lowers unemployment and raises inflation, an Increase in tax increases unemployment and lowers inflation, (a) Analyse the effect of an expansionary monetary policy and (b) a reduction in taxes on the chances of the incumbent