Question 1: Suppose the following are national accounting data for a given year for Malaysia (hypothetical data). Amount (Billions of RM) Consumption of fixed capital 285 Gross private domestic investment 725 Government consumption expenditures 720 Government investment expenditures 165 Imports -550 Exports 625 Household consumption expenditure 3010 Net property income paid overseas -35 Calculate GDP and the country’s gross national expenditure using the expenditure approach; Derive the country’s gross national product (GNP); Derive the country’s net national product (NNP); Derive the country’s current account balance; Derive the country’s gross national savings. (2 marks each) Question 2: (2.5 marks each part) Using the aggregate demand – aggregate supply (AD-AS) diagram, show how the four economic events would affect economic activity, the price and employment levels. (Note: use a separate AD-AS diagram for each event) A decrease in personal income tax; An increase in workforce skills through special training programs; An decrease in exports; An increase in an economy’s capital stock. Question 3: Describe three problems of using fiscal policy to achieve a precise level of GDP. (3 marks) Why is frictional unemployment inevitable in an economy characterised by imperfect job information and non-zero job-search time? (3.5 marks) Is structural unemployment something macroeconomic policymakers should be concerned about? How does it differ from cyclical unemployment? (3.5 marks) Question 4: (10 marks total - 5 marks each part) Illustrate and explain with diagrams the difference between demand-pull and cost-push inflation; (2.5 marks for the diagram and 2.5 marks for the explanation) Provide (describe) two (2) causes of each type of inflation (2.5 marks for 2 demand-pull causes and 2.5 marks for 2 cost-push causes) Question 5: If the Bank Negara Malaysia sold RM800 million of government securities...
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