Pakistan under IMF structural adjustment program (SAP) is focusing on stringent monetary and fiscal policies regiems. Pakistan's GDP in 2019 was estimated at $250 billion. To target inflation down to the range of 5-7% it was decided in monetary policy statement to keep interest rate at 13.25% along with worldwide fall in interest rate has increased financial inflows and public interest in buying government bonds and securities. Authorities was of the view that a fiscal stimulus of $ ___X__ billion could have increased GDP much more than estimated in 2019. Contrary to the view of other wings that increase in taxation of$ ___X__ billion could have reduced budget deficit required for SAP.

World has viewed a shock of coronavirus pandemic which has created unique challenges for Pakistan's economy as well. GDP was expected to reach $280 billion by the end of 2020. Unfortunately, due to Covid19 it appears that GDP will be 10% less than it is expected. Government of Pakistan has tried monetary and fiscal and policy responses and found it easier to provide liquidity support to households and businesses to help them through the ensuing temporary phase of economic disruption. In particular, along with fiscal stimulus and palaces of billions of rupees and the successive policy rate cuts and sizeable cheap loans provided through the SBP's enhanced refinancing facilities have helped maintain credit flows, bolster the cash flow of borrowers, support asset prices and expenditures. This has also caused investment to rise from 15% of GDP to 17% of GDP. At the same time Covid 19 has made many people unemployed and caused less spending on food and non-food items. Moreover, in this time of difficulty people have been found in online fraudulent transactions. Results of growth related policies are never fully achieved in Pakistan. Many economists are of the view that public's trust on government policies is very important to bring desired results. A recent survey shows that only 40% of the Pakistani public believe in government decision about economy and respond accordingly.

Using IS-LM framework Answer the following questions:

1. What kind of fiscal and monetary policy was implemented in 2019? Show through diagram.

2. Calculate how much government expenditures will be required to bring GDP at $280 in 2020 by considering MPC= 0.80.

3.Show policy response in 2019 and its possible impact on GDP through IS-LM framework.

. Calculate Investment multiplier under COVID19 by considering MPC= 0.80.

Recognize monetary or fiscal policy shocks. How these shocks will shift IS or LM or both.

. Explain if above discussed policies are example of active/ passive policies. DO you see any policy rule?