Answer Happy

Question 5: (a) (i) If the Omicron virus is expected to bring negative impacts to the global economy after a long lockdown in some countries. Describe the impacts of that expectation on private sectors' spending and compare it with the Great Depression in 1930s. Assume that all other things remain constant. (5 marks) (ii) Explain the possible fiscal policy in respond to part (i) and discuss the implication of this fiscal policy to government budget. Discuss the possible advantages and disadvantages of this fiscal policy to the current and future social well-being. (5 marks) (b) Draw an injection-withdrawal diagram using the information below. Indicates the equilibrium national income in your diagram. Assume disposable income (Yd) = national income (Y). S = -500+ 0.25 Y I = 800 G = 640 T = 0.05Y (5 marks) (c) If the minister believed that 'fiscal policy is more efficient than monetary policy in healing the economy during a recession'. Argue the statement. (5 marks) (d) Explain Laffer curve with a diagram. (5 marks)