Answered step-by-stepThe Monetary Authority of Singapore (MAS) conducts monetary policy...
The Monetary Authority of Singapore (MAS) conducts monetary policy to help stabilise the economy as it moves through the business cycle. Suppose that Singapore's national saving rate (savings as a % of GDP) is 45% prior to the economy entering a recession. Assume the economy enters recession and that national income falls by $100 billion with falling consumption expenditure constituting 60% of the overall fall. Use these figures presented to calculate the value of the multiplier both prior to the recession and after entering the recession. Present your calculation formula and all of your workings. Provide a clear sentence explaining how to interpret the multiplier value(s) shown. (2 marks) Next, interpret what the value of the multiplier means for the economy and government policymakers considering a fiscal response to the recession. If the multiplier value has changed be sure to comment on whether it has changed in a manner you would expect as an economy enters recession.(2 marks)
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