Problem 2:

1. Question: How is unemployment defined and how is the unemployment rate calculated?


2. Question: What two direct measures did the government undertake to increase job opportunities as mentioned in the article?


3. Question: What type of unemployment is mentioned among graduates in the article? 


4. Question: How does unemployment negatively affect society and the economy?


Problem 3: 


1. Question: How is inflation defined and what indicator is used to measure inflation rate?


2. Question: How does inflation affect the real value of money? 


3. Question: What are the two types of inflation that occur when the price of imported fuel and raw materials rises?


4. Question: What are the sources of government revenue mentioned in the article?


5. Question: What two monetary policy tools can Bank Negara Malaysia use to control inflation?


Problem 4:


1. Question: What is fiscal policy and what are its aims?  


2. Question: What is monetary policy and how do interest rates and other instruments used in monetary policy impact the economy?


3. Question: Provide two examples of fiscal policy implemented during the COVID-19 pandemic.


4. Question: Provide three examples of monetary policy implemented during the COVID-19 pandemic. 




Question 2:

Unemployment can be define that individuals who are willing and able to work at particular time and are not able to find job. The proportion of the labor force that is jobless is used to calculate the unemployment rate. The labor force consists of people who are either working or actively looking for work.

Measuring formula:


Private companies also help the government in reduction of unemployment rate by creating more job opportunities and providing industrial training to new workers. Private companies also help the government by implementing job creation programs and initiatives. These strategies with other initiative help the government and economy for reduction of unemployment.

The two direct measures undertaken by the government to increase job opportunities as mentioned in the article are:

Jobs Malaysia: 

This program started to provide job opportunities for job seekers, particularly fresh graduates.

1Malaysia Training Scheme: 

A program started to providing skills training and opportunities for job seekers to enhance their employability.

The type of unemployment among graduates mentioned in the article is structural unemployment. Structural unemployment define as the mismatch between the skills and qualifications of job seekers or worker and available job opportunities. Cyclical unemployment occurs due to fluctuations in the business cycle or due to recession period. It is typically occur due to decline in economic activity.

Unemployment negatively effects society and the economy collectively. Unemployment cause to decrease in consumer income and ultimately spending in short run. This impact on businesses, particularly those that rely on consumer spending as reduction in demand and supply. Unemployment lead to a decline in human capital and skills, as individuals who are unemployed experience a loss of skills and experience due to prolonged unemployment in long run.


Question 3:

The rise in the average price of goods and services within a specific time period in the economy is referred to as inflation. The Consumer Price Index (CPI) is a significant indicator because it records changes in the costs of a selection of goods and services that are frequently used by households. It aids policymakers and serves as a gauge of inflation rate.

When the price level increases the value of money decreases or real money value decline. It can be explain as when there is inflation individuals can purchase fewer goods and services as compared to previous with the same amount of money. This cause to reduction in the purchasing power of money.

Cost-push inflation and imported inflation are the two types of inflation that happen when the price of imported fuel and raw materials rises. Cost-push inflation happens when the price of raw materials or the cost of manufacturing increases, which causes the price of goods and services to rise. Imported inflation happens when the cost of imported products and services rises, which raises the overall level of prices in the economy.

The sources of government revenue as mentioned in the article are administered prices and Goods and Services Tax (GST). Administered prices explain as prices of goods and services that are set by the government, such as fuel prices. The change in administered prices resulted in government revenue. GST is consumption tax that apply on supply of goods and services. The implementation and change in GST cause to government revenue.

Bank Negara Malaysia can use two monetary tools to control to control inflation like:

Interest rate policy: The central bank adjust interest rates (increase interest rate) to reduce borrowing and spending in the economy.

Open market operations: To change the amount of money in the economy, the central bank can purchase or sell government securities on the open market. By lowering the money supply, inflation is decreased.


Question 4:

Fiscal policy refers to activities taken by the government that have an impact on taxation and spending in order to manage inflation, deflation, and economic growth. Taxation and spending by the government have a direct impact on the economy. Economic stability and growth are the aims of fiscal policy.

The activities done by a central bank to regulate or control the money supply and interest rates in order to achieve economic objectives are known as monetary policy. Interest rates and other instruments used in monetary policy have an impact on how consumers and corporations borrow money and spend it.


Examples of fiscal policy implemented during the Covid-19 pandemic include:

Stimulus packages: 

Governments implemented many stimulus packages to provide financial assistance to households, businesses, and industries that were affected by the pandemic. The stimulus packages was to increase government spending to rise economic activity by giving them tax relief and unemployment benefits or allowance. Government reduced the tax on goods and services and increase the benefits to the unemployed.

Examples of monetary policy implemented during the Covid-19 pandemic include:

Decrease in rate of Interest: Central banks cut the rate of interest to encourage lending and investment, which cause to stimulate economic activity.

Quantitative easing: Central banks increase the money supply and liquidity to financial markets.

Loan facilities: Central banks established loan facilities to provide financial support to banks and businesses.