KUALA LUMPUR (REUTERS) - Malaysia's central bank cut its key interest rate by 50 basis points to 2 per cent on Tuesday (May 5), its lowest since 2009, to help the South-east Asian economy weather the impact of the coronavirus pandemic and a collapse in prices for its energy exports. Bank Negara Malaysia (BNM) cut its overnight policy rate a day after the government eased sixweek long curbs on movement and businesses. The central bank had projected exports to contract by as much as 8.7 per cent in 2020, as key trading partners struggled with the pandemic. The collapse in global oil prices has also hit Malaysia's export earnings from liquefied natural gas.( https://www.straitstimes.com/business/economy/malaysias-central-bank-cuts-key-interest-rate-to-2- lowest-since-2009) 2. Answer the questions based on the above excerpt.

a. What policy instrument is the government using to ease the slowdown in the economy? (5 marks)

b. How does a collapse in the oil price affect Malaysia? (5 marks)

c. How would a cut in interest rate help weather the economic crisis? Explain using relevant diagrams. (20 marks)