ECS3703 Assignment 1 (DETAILED ANSWERS) Semester 2 2026 - DISTINCTION GUARANTEED

ECS3703 Assignment 1 (DETAILED ANSWERS) Semester 2 2026 - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED Answers, guidelines, workings and references.. Assume that the Southern African Development Community (SADC) countries operate under flexible exchange rate systems, and they desire to maintain balanced current accounts and reach full employment. (a) Explain which macroeconomic policy these countries should use to achieve this under a scenario of perfect capital mobility and imperfect capital mobility, and why? With the aid of diagrams, briefly explain how the governments of the Southern African Development Community (SADC) can use the relevant policies mentioned in (a) under each scenario Suppose the Southern African Development Community (SADC) region intends to adopt a common currency for its member countries, as it would be economically beneficial for the participants (nations). Various parts of South Africa experienced climate-related disasters in 2026 and in recent years. These disasters have adversely affected economic infrastructure, the social well-being of communities, and the economy. Assuming an open economy with flexible prices, use a fully labelled diagram to explain the effect of these disasters on production activities and, in turn, on the aggregate long-run and short-run supply of goods and services. Also, explain how the South African government can use macroeconomic policies to mitigate the impact of these disruptions What is this arrangement called In your view, would the Southern African Development Community (SADC) benefit from this kind of arrangement? Explain your answer. Discuss the risks and benefits associated with the adoption of a common currency Assume that South Africa operates under the principle of free movement of capital and fixed exchange rates. The country seeks to reach the full-employment level of national income with equilibrium in the balance of payments. Which relevant macroeconomic policy would you advise South Africa to use to achieve this and why 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