a) Explain hysteresis using an appropriate diagram.

b) Using 1S-LM-bb figure, explain why the bond market curve (bb curve) is positively sloped and relatively flat.

c) What is inflation rate targeting?

d) In your understanding, when do a country adopt inflation rate targeting

e) Differentiate between a fixed and flexible exchange rate.

(ii) Determine the effects if monetary policy is used to stabilize the economy

(iii) Determine the effects if fiscal policy is used to stabilize the economy.