Q2. a) Utopia is a closed economy and doesn’t involve with any international trade; assume that the taxes are $750 bi

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Q2. a) Utopia is a closed economy and doesn’t involve with any international trade; assume that the taxes are $750 billion, government transfers are $400 billion, government expenditures are $500 billion, and investment is $400 billion. What are private saving, public saving and national saving? (6 m)
b) Identify each of the following acts as representing either saving or investment. (4 m)
(i) Daniel earns RM5000 a month and he uses some of his income to buy government bonds.
(ii) Amy has started her delivery business early of this year and she purchases a new truck for her delivery business using borrowed funds.
(iii) Alia received cash RM100 000 from her generous father and she uses some of it to buy stock in a major corporation.
(iv) Aisyah wants to open up a bicycle ship, she hires a contractor to construct a new building for her bicycle shop.
c)
Figure 1: AD & AS diagram
Based on the graph of the aggregate-demand and aggregate-supply curve in Figure 1, assume that the initial equilibrium is at point A. Briefly explain what are the factors of production that could cause the shift of point A to point D (the decline in the aggregate output). (5 m)
d) You need to draw the graph of the aggregate-demand and aggregate-supply curve of a country. What will happen to the equilibrium of the economy if the government imposes a contractionary monetary policy. Please show on the graph and explain briefly. (5 m)