Recently, through Bank Negara (Central Bank of Malaysia), the Government has announced an increase in the Overnight Policy Rate. (a) What is the name of the policy employed by the government above? (3 marks)
(b) What will happen to the money supply, money-demand and equilibrium interest rate in the ‘money market’? Analyze the situation using the money supply and money-demand curve. (6 marks)
(c) What will happen to real output and aggregate demand? Analyze the situation using the aggregate-demand curve. (6 marks)