ECONOMICS (ECO415) (30 MARKS) CASE STUDY Predict and prepare: warning signs of a recession The economics of recessions have become increasingly complex. One word that has been bandied about recently is "stagflation", which refers to an occurrence of inflationary prices and a subsequent recession - meaning loss of jobs and consumer purchasing power, simultaneously. Traditional economic theory says this sort of simultaneous occurrence should not happen. After all, inflation happens when consumers have jobs and buying power, not when they don't have jobs. But the real world is filled with economic complexities, and as such, stagflation could happen when technology replaces humans, leaving them jobless. Countries need to know how to manage such situations well to maintain socioeconomic stability. These are two of the three indicators to help you recognize the signs of a recession. Confidence Index: Even in economics, how individuals feel is important. Confidence indexes provide an indication of households' consumption and saving, based on answers regarding their expected financial situation and their sentiment about the economy, unemployment, and capability of savings. Malaysia's consumer confidence, for example, increased from 99 points in last year's fourth quarter (Q4 2021) to 108.9 in the first quarter of 2022, driven by the improvement in existing salaries and employment. Consumer confidence remains historically high, despite a drop in early 2019 due to lengthy government closures. It has since rebounded and remained stable. Employment Data: A rise in employment and a decline in unemployment are associated with higher labor demand. As such, employment data are crucial to evaluating the state of the economy. With an increase of 2.3% on-year to 16.34 million people in Q2 2022, Malaysia's labor force has continued to show signs of growth since the country moved into the endemic phase Accordingly, the labor force participation rate increased by 0.2% from the first quarter to 69.2%, exceeding the pre-pandemic rate of 69.1% in Q4 2019. And the trend continues: the Department of Statistics reported that the number of unemployed people reduced to below 700,000 last month, the lowest since April 2020. Extracted and adapted from FMT Online 6th December 2022 Based on the article, answer the following questions. a) Define recession and briefly explain two indicators of a recession. (4 marks) b) On the second paragraph, it is stated that 'Countries need to know how to manage such situations well to maintain socioeconomic stability.' Describe how a government may manage the situation by implementing fiscal policy. (5 marks) C) Define inflation. State and explain the appropriate type of inflation that Malaysia is experiencing