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Instructions : Answer ALL questions. This is a CLOSED BOOK examination. Please provide your answers in handwritten form, combine all the answers, scan and save
Instructions : Answer ALL questions. This is a CLOSED BOOK examination. Please provide your answers in handwritten form, combine all the answers, scan and save them either in MSWord or PDF format. Name the file using your INDEX number. Upload the file in the space provided. Question 1/Soalan 1 (35 marks/markah) (a) Based on the Aggregate Expenditure Model, describe each of the terms below. (i) Leakage (ii) Injection (iii) Recessionary Expenditure Gap (iv) Inflationary Expenditure Gap (b) What do Economists mean when they say that monetary policy can exhibit cyclical asymmetry? In answering the questions, discuss the relationship between liquidity trap and cyclical asymmetry and why they are significant to policy makers. (C) Summarize the basic objective of monetary policy and explain why monetary policy is easier to conduct than fiscal policy
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