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2. (a) The General Manager of the Central Bank announces in the newspaper that the rate of inflation will be reduced from 9% to 4%.

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2. (a) The General Manager of the Central Bank announces in the newspaper that the rate of inflation will be reduced from 9% to 4%. However, the people reduce their inflation expectations to 6%. Central Bank does decrease the rate of inflation to 4%. What will happen to the rate of unemployment? (5 marks) (b) Explain in your own words the process called monetary injection. (5 marks) (Rubrics: 5 marks for the correct answer in part-a. 5 marks for correctly explaining the process in part-b- Total 10 marks.)

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