Suppose the Malaysian government's debt increased at a precipitous rate.
a. Explain the effect these deficits would have on the nation's monetary base and M2 money supply.
b. Explain these deficits' effects on the real risk-free interest rate and nominal interest rate.
c. Suppose the Malaysian government wanted to pursue expansionary fiscal policy. Explain why separating the active and passive deficits would be important to policymakers.