Question One [Compulsory Question] Read the case below and answer the questions below it for 50 marks The Kwabre land economy has gone through recession following the COVID-19 pandemic in 2020. The economists in the country advised the government to undertake a lot of activities when the pandemic started. Some of the measures were a situation there was great reduction in taxes of all the frontline workers. Also to cushion spending of all the people in the country, the government gave free water to all domestic users and free light to all lifeline consumers and absorbed 50% of light bill of all other consumers. Though some people lost their job, more incentives in the form of transfer payments were made by the government to help the most vulnerable. There were more restrictions policies announced by the President. The most dangerous one that people did not like was the lockdown measures involving the two major cities and their contagious districts to prevent the spread of the infectious coronavirus. Since the economy is more of an informal sector most people in the affected cities were forced to stay away from work during the period of the partial lockdown. As a result, the government gave out further incentives to people such as purchasing and providing both cooked and raw food; one problem here was the increase in the money supply in the economy. During the pandemic era and the measures put in place, the following economic indicators have been provided. The marginal propensity to save is found to be 9% despite the hardships. Autonomous consumption was found to be GHC12,500.00 and investment from the private sector was GHC15,000.00 purposely to produce Veronica buckets, sanitizers and nose masks as COVID-19 protocol essential to fight the spread of the virus. The potential output for the year was found to be 310,155.00. Required: i) Assume a two sector model for Kwabreland economy, calculate the equilibrium income 6 marks ii) Calculate the output gap and state the type of gap. 4 marks iii) Show in a diagram equilibrium income and the potential output. Label the output gap in the diagram. 10 marks iv) Discuss how the equilibrium output can be achieved using the adjustment process 8 marks v) Assume the economy is Ghanas economy, examine two negative and two positive impacts of the COVID-19 on the economy. 12 marks vi) How can the Central bank reduce the amount of money supply in the Kwabre land economy?