QUESTION 1

The world struggled since April 2020 to curb the exponential progression of the coronavirus (COVID-19) pandemic. Dozens of countries have imposed restrictions on travel, work and social gatherings. A significant proportion of the world's population has been lockdown, and unprecedented supply and demand instability has crippled the economy. In response, central banks unveiled major lending schemes to avert a financial crisis, and governments launched unprecedented fiscal packages intended to mitigate the crash. In a matter of weeks, the pandemic has been one of the worst global economic disasters since the Great Depression.

As policymakers struggled to make decisions that balanced the public health and economic concerns, confusion and uncertainty were rising. How long would the lockdowns last? What would be the economic and political consequences? How unequal would the effects and responses be, both within and cross countries? What would the "reopening" look like? Was this the end of globalization, or the beginning of a new era of international cooperation? The only certainty was that some of the hardest choices still lay ahead.

Malaysia announced its first Covid-19 cases on January 25, 2020 involving three chinese tourists who had entered Malaysia via Johor from Singapore on January 23, 2020. The number of cases then rose to 22 by February 16, 2020 representing a first wave of cases. A second wave of cases began on February 27, 2020 and since then the number of people affected by the coronavirus has risen to more than 1 ,000. Malaysia is now facing the third wave of infections which began on September 20, 2020. The mutated version of the Covid-19 that swept the

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United Kingdom into lockdown last month has been found in Malaysia. Health Director-General Tan Sri Noor Hisham Abdullah said that one case of variant UK B. 1.1.7 was identified on January 1 1, 2021. The case has been identified from a traveler who had a history of travel to the United Kingdom in December 2020 (refer Figure 1).

Figure 1: Distribution of Covid-19 Cases in Malaysia

Source: Cavallo, A., & Godwin, C. (2020). The Coronavirus (COVID-19) Pandemic and the Global Economy and Ministry of Health Malaysia, February 10, 2021

There was little doubt that a global recession was coming, but it was far more difficult to foresee how serious it would be and how long it would take to recover. If there was one lesson from previous crises, there was a need to move rapidly to avoid irreversible declines in productivity and welfare, a phenomenon that macroeconomists call "hysteresis." Most governments were planning for two stages to resolve the crisis. The first was about containment and stabilization, with a focus on providing relief. The second was about recovery and stimulus. In the process, the traditional lines separating tools such as monetary and fiscal policy were becoming blurred.

Based on the Covid-19 case above:

a)Discuss how can government use fiscal and monetary policies to stimulate the economy and explain how they will assist Malaysians in general. (20 Marks)

b)Describe what is PENJANA. Briefly outline THREE (3) main thrusts of PENJANA and discuss how PENJANA enables the Malaysian economy to recalibrate, rebound and recover.(10 Marks)

(Total: 30 Marks)

Figure 1: Distribution of Covid-19 Cases in Malaysia

Source: Cavallo, A., & Godwin, C. (2020). The Coronavirus (COVID-19) Pandemic and the Global Economy and Ministry of Health Malaysia, February 10, 2021

DISTRIBUTION OF COVID-19 CASES ACCORDING TO DATE OF CONFIRMATION New Caver Dicharged CALL 4714 5724 4571 4314 3731 3455 3180 THO SOATH 1 7 Jan Jan Jan Jan Feb Feb Feb Feb