Intermediate Macroeconomics Question

Every mark requires 1 fact/point. Thank you.

Question 1

(a)Based on the presentation of 2021 Budget by the Finance Minister, income tax for corporate companies has been reduced. By using appropriate diagrams, show and explain the best target that should be taken by the central bank in dealing the impact. (12marks)

(b) "Credibility is extremely important in the conduct of monetary policy". Comment on the statement. (6 marks)

(c) What is the consumption function? Differentiate between Keynesian consumption theory and Permanent income theory of consumption. (7 marks)

Main References:

Dornbush, R., Fisher, S. and Startz, R. (2018). Macroeconomics. 13th Edition, New York: McGraw Hill.

Additional References:

Blanchard, O. & Johnson, D.R. (2013). Macroeconomics. 6^th Edition, Essex: Pearson Education Limited.

Gordon, R. J. (2012). Macroeconomics. 12^th Edition, Boston: Pearson-Addison Wesley.

Mishkin, F.S. (2012). Macroeconomics: Policies and Practices. Global Edition, Essex: Pearson Education Limited.