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ECS3703 Assignment 2 (ANSWERS) Semester 2 2023. R63,52
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Exam (elaborations)

ECS3703 Assignment 2 (ANSWERS) Semester 2 2023.

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ECS3703 Assignment 2 (ANSWERS) Semester 2 2023. Question 1 [25] Suppose the Sub-Saharan African region intends to adopt a common currency for its member countries as it would be economically beneficial for the participants (nations). (a) What is this arrangement called……………………�...

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  • August 1, 2023
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ECS3703 Assignment 2
(ANSWERS) Semester 2 2023.
Question 1 [25]

Suppose the Sub-Saharan African region intends to adopt a common currency for its member
countries as it would be economically beneficial for the participants (nations).

(a) What is this arrangement called……………………….…………………… (2)

(b) In your view, would the Sub-Saharan African region have any chance of benefiting from
this kind of arrangement, and why?.................................(10)

(c) Discuss the risks and benefits associated with the adoption of a common
currency……………………….…….…….…………………….……………. (13)

Question 2 [25]

Nation A is a small nation that operates under the principle of free movement of capital and
fixed exchange rates. The country desires to reach the full-employment level of national
income with equilibrium in its balance of payments.

(a) Which relevant macroeconomic policy would you advise nation A to use to achieve this
and why?................................................................................. (5)

(b) With the aid of a graph, explain how the nation should use the relevant policy mentioned
in (a) to achieve the full-employment level of national income with equilibrium in its balance
of payments………………………………………. (20)

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