Define fiscal and monetary policies and discuss whether policymakers should use these policies to stabilize the economy or not? Provide arguments considering Pakistan economy. (3) Q3. Explain the difference between the floating and fixed exchange rates? Explain which ER type Pakistan is experiencing at the moment. (3) Q4. Draw and explain the impact of decrease in investment tax credit on the market for loanable funds? Highlight what will happen to interest rate and quantity for loans. (4) Q5. Consider the economy is in long run equilibrium (AS-AD framework), draw and explain the impact of increase in cost of raw material on equilibrium in short run? Demonstrate how the equilibrium can be restored in long run if the government use the stabilization policy? Which policy the government will use? What will happen to equilibrium price and output levels in both (short-run and long-run)