QUESTION 1 Suppose the situation as below: "I went to the restaurant the other night with two friends. We each ordered our drink: Japanese tea, Masala tea and Oolong tea. The waitress brought us our drinks." Then he put the drinks on the table and said, 'That'll be 300 yen, 100 rupees and 20 yuan." "Luckily, we had it." We dropped the currency on the table. So, "What could we have done if we didn't have those currencies?" QUESTION 2 Oolong tea is produced in China and sold in many countries. In the province of Fujian, per 100 grams of Oolong tea sells for 50 yuan. In Kuala Lumpur, per 100 grams of the same Oolong tea sells for RM20. Suppose that the exchange rate is RM0.45 = 1 yuan. 1. Please do the following calculations based on the above information: How much would it cost in Malaysian currency to buy the tea in Fujian? 2. How much would it cost in China currency to buy the tea in Kuala Lumpur? Is there an arbitrage opportunity? If there is an arbitrage opportunity, where would you buy and where would you sell? How much profit could you expect on a per 100 grams package? 3. 4. QUESTION 3 Briefly explain how fiscal policy affected the aggregate demand and aggregate supply in economy by using one of the productive sector in Malaysia as an example