Q1: There is a recession in Saudi Arabia. The Central Bank
Governor wants to assist the government in getting the economy out
of this recession. What should he do to fix this problem?
i) What policy tools are available to SAMA to combat the
recession?
ii). Explain in which direction each of the tools of monetary
policy have to change to combat the recession? iii). How will
the SAMA change these tools?
iiii) Explain how do changes in SAMAS monetary policy tools get
transmitted to AD – {Hint use the AD equation) and eventually to
fixing the recession.
Q2: Discuss monetary vs interest rate targeting?
Q3: What’s the money multiplier? Explain this concept verbally
first and then using an example with numbers.
