ECS3703
Assignment 2 Semester 1 2024
Detailed Solutions, Workings & Explanations
Unique number: 549632
Due Date: 8 April 2024
QUESTION 1
a.
Achieving both internal and external balance under the described conditions (flexible
exchange rate system, imperfect capital mobility) is a complex endeavor that requires
careful macroeconomic policy orchestration. Internal balance refers to reaching full
employment and price stability, while external balance involves maintaining a sustainable
current account balance that neither leads to excessive international indebtedness nor
massive surpluses.
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