How Malaysia Manage Inflation

Table of Contents Page

LIST OF ILLUSTRATIONS
ABSTRACT
INTRODUCTION 1. Background

2. Problem

3. Purpose

DISCUSSION 1. Monetary Policy Open Market Operation
Reserve Requirement 2. Fiscal Policy Reduce the level of government purchases
Increase taxes
Transfer Payments

CONCLUSION
RECOMMENDATIONS
REFERENCES

List of Illustration
Figure 1: Malaysia Inflation Rate Chart
Figure 2: Malaysia Interest Rate Chart
Figure 3: Malaysia’s Budget Operational Expenditure 1998-2009 Chart
Figure 4: Malaysia Corporate and Personal Income Tax Rate Trend

Abstract

The inflation rate in Malaysia has last reported 3.3 in May of 2011. Although this rate is not quite high but the government must to control before it continue rising because in many other countries, the inflation has brought a lot of troubles and become a burden to them. This report is discussing how Malaysia government including Bank Negara Malaysia must carry out some strategies and actions to maintain the inflation rate in a managerial level. In order to prevent the problems such as slow down economic growth, loss of investment, value of ringgit diminished. Yet the government still operates by reducing the flow of money in our country, and influencing the interest rate for borrowing to commercial banks. To do this, the inflation could be better controlled and the things we need to do are implement the fiscal policies like reducing the government purchases and increase taxes. Additionally, the monetary policies should be more effective to control the inflation rate, so that it could cause the inflation to be steady.

INTRODUCTION
Background
Inflation is a contention issue in all around the world and it is a rise in the general level of prices of goods and services in an economy over a period of time. Each unit of currency buys fewer goods and