Subject : Macroeconomics

Question 2 Food ination continues to contribute to the rise in national ination. January 2022 National ination in January 2022 increased 2.3 per cent to 124.9 as against 122.1 in the same month of the preceding year due to the base effect. The increase also surpassed the average ination in Malaysia for the period 2011 to January 2022 (1.9%). Source: Department of Statistic Malaysia. a) Discuss how government control ination rate using Open Market Operation (0M0) and reserve requirement by discretionary monetary policy (10 Marks) b) Explain THREE (3) factors that cause inflation by demand pull inflation. (6 Marks)