Macroeconomics

Running head: MACROECONOMICS
Macroeconomics
Name of the Student
Name of the University
Course ID

MACROECONOMICS1
Table of Contents
Article.........................................................................................................................................2
Analysis......................................................................................................................................2
Introduction............................................................................................................................2
Economic analysis..................................................................................................................2
Conclusion..............................................................................................................................4
References..................................................................................................................................5
Appendix....................................................................................................................................6

MACROECONOMICS2
Article
https://www.reuters.com/article/malaysia-economy-rates/update-2-malaysia-c-bank-makes-
1st-rate-cut-since-2016-in-bid-to-lift-growth-idUSL3N22J16A
Analysis
Introduction
The article focuses on the monetary policy to boost the slow economic growth of
Malaysia. The slow economic growth means that the economy will operate at a lower
economic equilibrium than the desirable and full employment level output in the long run.
The monetary policy that the Bank Negara Malaysia used is the cut in Overnight Policy Rate
(OPR) to boost the economic growth rate by pushing the consumption demand up. The
consumption increases due to the induced effect exerted by the increase in the investment. To
discuss this, we thus use the theory of monetary policy and aggregate supply and aggregate
demand model.
Economic analysis
As per the article, the Malaysian economy is facing sluggish economic growth, which
is negatively affecting the overall economy. In the long run, slow down in economic growth
will reduce the total output of the economy due to negative future assumption regarding the
increase in income. Thus, stagnation in economic growth will not increase employment, and
the businesses will be sluggish (Coates 2014). The economy will operate in the lower output
level than the full employment output level. The equilibrium level is given by the equilibrium
of price P1 and quantity Q1 as show in figure 3 in appendix. The desirable long run
equilibrium is also given in figure 3 and shown as red dot and is the full employment level of
output without any recessionary or inflationary gap. The slowing down of the economy has
caused due to several reasons; one of them as stated in the article, is the weak export sector.