Problem Scenario

COMMERCE DEPARTMENT
COMMERCE DEPARTMENT
DPB20033 – MACROECONOMICS
SESSION ASSESSMENT TOPIC PLO CLO CLUSTER DOMAIN
TAXONOMY
1 2023/2024 Problem 5-6 7 3 4 A2

Scenario
GROUP MARKS
NAME : UGENTHIRAN A/L ARRUMUGAM

CLASS : DAT2A / 100
STUDENT NAME AND MATRIX 1. Student's name: UGENTHIRAN A/L ARRUMUGAM

CARD NO. (Matrix No): 10DAT22F2001
NAME OF LECTURER PUAN SYAFAWATI BINTI ABU BAKAR

A) The general increase in prices of goods and services over time in an economy that reduces
the monetary value of a currency is referred to as inflation.The overall upward trend in
prices of goods and services over time in an economy that reduces the purchasing power
of a currency is referred to as inflation. The annual percentage change in the average
consumer's cost of purchasing a basket of goods and services—which may be constant or
vary at predetermined intervals, like annually—is what the consumer price index uses to
calculate inflation. Typically, the Laspeyres formula is used.The inflation rate in Malaysia
increased by 0.9% from 2021 to 3.38% in 2022.The inflation rate in Malaysia went up by
3.62% from 2020 to 2.48% in 2021. Malaysia inflation rate for 2020 was -1.14%, a 1.8%
decline from 2019. In 2019, Malaysia's inflation rate was 0.66%, down 0.22% from the year
before.The overall upward trend in prices of goods and services over time in an economy
that reduces the purchasing power of a country's currency is referred to as inflation. The
gross value added by every producer located in the economy, plus any product taxes and
less any subsidies not included in the value of the items, is the GDP at purchaser's prices.
It is calculated without accounting for the depletion and deterioration of natural resources or
the depreciation of artificial assets. Current U.S. dollars are used for data. GDP dollar
amounts are translated from local currencies using official exchange rates for a specific
year..An alternate conversion factor is utilised for a few countries where the official
exchange rate does not accurately reflect the rate that is effectively applied to real foreign
exchange transactions.The GDP rate of Malaysia climbed by 8.93% from 2021 to $406.31
billion in 2022.The gross domestic product (GDP) rate of Malaysia in 2021 increased by
10.57% from 2020 to $372.98 billion.The GDP rate of Malaysia in 2020 was $337.34 billion,
a 7.62% decrease from 2019.The GDP rate of Malaysia increased by 1.78% from 2018 to
$365.18 billion in 2019. Over that time, Malaysia's average percentage was 3.39 percent;
minimum percent were 2.45 percent in 1997 and maximum percent were 4.54 percent in
2020. The most accurate statistic is 3.73 percent for 2022. For comparison, the world
average in 2022 based on 176 countries is 7.45 percent. unemployment refers to the share
of the labour force that is without work but available for and seeking employment.
B ) When someone is eager and able to make a living but is lacking a paid job, that person is said
to be unemployed. The state in which people who are willing to work proactively seek employment
but are unable to locate positions that suit them is known as unemployment. It is frequently stated
as a proportion of the entire labour force. Unemployment is caused by a variety of factors, such as
changes in economic conditions, technological improvements, and industry structural changes.
Individuals and communities may be adversely impacted by high unemployment rates' social and
economic effects.
In 2020, Malaysia recorded its highest unemployment rate in its entire history. Covid 19 was the
primary cause of their higher unemployment rate. The pandemic caused many people to lose their
jobs, which led to a number of issues for Malaysians, such as rising product costs. Aside from that,
a few large corporations had to lay off staff because many of them could not work remotely.
Due in large measure to its healthy economy which is recognised as one of the biggest in South
East Asia and political stability, Malaysia had the lowest unemployment rate in 2014. Not
withstanding these encouraging figures, news reports indicate that the three percent of job
searchers and unemployed persons are mostly young people, both graduates and non-graduates,
who have had difficulty breaking into the workforce. It is for this reason that the Malaysian
government continually encourages companies to hire young workers in particular. The positive
state of economic conditions should assist. However, there have also been certain complaints
made related to gender discrimination and unemployment in the nation.
C) Discuss how inflation rate, unemployment rate and GDP rate relate each others and
relationship to the business cycle.
The relationship between GDP, unemployment, inflation, and business cycle speeds. The GDP
rate tends to go between minus 10 to plus 10 by 2020 when the economy is growing and the
economic cycle is in an expansionary phase. In 20202, the unemployment rate decreases from 4.5
to 3.5 due to corporate growth and improved job potential customers. On the other hand, if prices
rise in response to increased demand for goods and services, the inflation rate may rise from
negative 1 to positive 4 by 2020. However, in a contractionary stateThere are four phases to the
business cycle: peak, recession, trough, and recovery. When there are more jobs than workers,
the economy is at its peak and profits, interest rates, and wages rise. This is known as full
employment. There is a rise in unemployment due to the recession that is starting to slow down the
economy a reduction in monetary responsibilities. In addition, the bottom of the business cycle, or
the moment when the worst part of the recession ends. Employment levels, output, income,
wages, prices, and profits all begin to rise as the economy begins to recover and enter a period of
rebirth. There are four phases to the business cycle: peak, recession, trough, and recovery. When
there are more jobs than workers, the economy is at its peak and profits, interest rates, and wages
rise. This is known as full employment. There is a rise in unemployment due to the recession that
is starting to slow down the economy a reduction in monetary responsibilities. In addition, the
bottom of the business cycle, or the moment when the worst part of the recession ends.
Employment levels, output, income, wages, prices, and profits all begin to rise as the economy
begins to recover and enter a period of rebirth.
D)Discuss how the Malaysian government control the inflation by using monetary policy,
fiscal policy and direct policy.
To control inflation, the Malaysian government uses direct, fiscal, and monetary policies.Controlling
the amount of cash in the economy is the goal of monetary policy. In order to affect the quantity of
money in circulation, Bank Negara Malaysia, the Central Bank of Malaysia, manipulates interest
rates. Interest rates rise, pushing up the price of borrowing and reducing the appeal of taking out
loans for personal or corporate use. As a result, there is less money in circulation, which aids in
containing inflation.
On the other hand, when the central bank lowers interest rates, lending becomes less costly and
spending is promoted, both of which could lead to a rise in inflation. Therefore, in order to
guarantee constant and manageable inflation, the central bank continually tracks interest rates via
monetary policy.
The use of taxes and public spending by the government to affect the economy is known as fiscal
policy. In order to lower the amount of money in circulation and so help control inflation, the
Malaysian government may raise taxes. In a similar vein, they can lower public expenditure to
lower the demand for products and services, which will also aid in containing inflation.
In order to limit inflation, direct policy entails direct government involvement with specific
businesses or sectors. This might entail establishing price caps on necessities, providing subsidies
for necessities, or imposing direct rules on businesses to guarantee reasonable prices. These
measures may have a direct effect on consumers' cost of living and aid in controlling inflation.
To manage inflation and preserve economic stability, the Malaysian government often uses
monetary policy, fiscal policy, and direct policy. Their goal is to maintain growth and stability by
regulating the money supply, taxes, government spending, and personal involvement in a way
which keeps inflation within limit.
REFRENCE :
https://corporatefinanceinstitute.com/resources/economics/business-cycle/

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COMMERCE DEPARTMENT

1 2023/2024 Problem 5-6 7 3 4 A2

NAME : UGENTHIRAN A/L ARRUMUGAM

STUDENT NAME AND MATRIX 1. Student's name: UGENTHIRAN A/L ARRUMUGAM

NAME OF LECTURER PUAN SYAFAWATI BINTI ABU BAKAR

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