(a) Assuming Butterland is having an inflationary gap due to an increase in credit card

availability,

(i) Explain with a diagram the impact brought by credit card availability in the money market.

(ii) Suggest monetary policy to take to correct the inflationary gap.

(b) Subsequently, there is a survey conducted for consumer confidence indicating that a wave of pessimism is sweeping the country in the coming year. Would the policy suggested in (a) above to stabilize the economy still pursue? Use the ADAS model to explain.