4.2. Aggregate demand and aggregate supply can be used to analyse the linkage between the monetary and real sectors of the economy. Use the AD-AS model to illustrate and explain the impact of the virus-induced demand shock on the general price level and the level of real production and income in the economy. (4)

4.3. Demand management can be used by both fiscal and monetary policies. With reference to the extract, do you think that monetary policy partook in the employment of an expansionary or contractionary policy? Substantiate your answer. (2)

4.4. With reference to the extract, explain what the impact of the cut of 100 basis points in the repo rate () will be on the general price level (P) and the level of real production and income in the economy (Y). (2)

4.5. There are certain circumstances in which one type of policy may be more successful than another. In which circumstance would monetary policy be more successful than fiscal policy?