ECS3701 2025 ASSIGNMENT 2 SEM 1 2025 ECS3701 2025
DISCLAIMER
THE DOCUMENT PRESENTED IS A DEMOSTRATION ON HOW STUDENTS CAN
APPROACH THE ASSIGNMENT FOR ECS3701 ASSIGNMENT 2 SEM 1 2025. IT
IS BASED ON PRESCRIBED MATERIAL AND EXTERNAL RESEARCH. THE
DOCUMENT CONTAINS BOTH SHORT NOTES AND A RESPONSE EXAMPLE
FOR EACH QUESTION. STUDENTS ARE THEREFORE ADVISED NOT TO COPY
AND PASTE BUT USE THE DOCUMENT AS A RESEARCH GUIDE THAT WOULD
HELP THEM DRAFT THEIR OWN FINAL COPIES.
, ECS3701 2025 ASSIGNMENT 2 SEM 1 2025 ECS3701 2025
Table of Contents
Question 2.01 ............................................................................................................. 3
2.02 What is nominal anchor? Explain the two ways in which a credible nominal anchor
can be beneficial. [10] ................................................................................................ 6
2.03 Classify each of the following as either a policy instrument or an intermediary
target. Explain your answer. [10] ................................................................................ 7
a. Long-term interest rates...................................................................................... 7
b. Central bank interest rates .................................................................................. 7
2.04 Differentiate between the main factors in the initiation of financial crises between
the advanced and emerging market economies. [10] ................................................. 8
Initiation of Financial Crises in Advanced Economies ................................................ 8
2.05 The two ways in which government can finance its deficit is through monetizing
the debt and printing money. Explain each of these two ways in detail and what
happens to monetary base and money supply. [10] ................................................. 10
DISCLAIMER
THE DOCUMENT PRESENTED IS A DEMOSTRATION ON HOW STUDENTS CAN
APPROACH THE ASSIGNMENT FOR ECS3701 ASSIGNMENT 2 SEM 1 2025. IT
IS BASED ON PRESCRIBED MATERIAL AND EXTERNAL RESEARCH. THE
DOCUMENT CONTAINS BOTH SHORT NOTES AND A RESPONSE EXAMPLE
FOR EACH QUESTION. STUDENTS ARE THEREFORE ADVISED NOT TO COPY
AND PASTE BUT USE THE DOCUMENT AS A RESEARCH GUIDE THAT WOULD
HELP THEM DRAFT THEIR OWN FINAL COPIES.
, ECS3701 2025 ASSIGNMENT 2 SEM 1 2025 ECS3701 2025
Table of Contents
Question 2.01 ............................................................................................................. 3
2.02 What is nominal anchor? Explain the two ways in which a credible nominal anchor
can be beneficial. [10] ................................................................................................ 6
2.03 Classify each of the following as either a policy instrument or an intermediary
target. Explain your answer. [10] ................................................................................ 7
a. Long-term interest rates...................................................................................... 7
b. Central bank interest rates .................................................................................. 7
2.04 Differentiate between the main factors in the initiation of financial crises between
the advanced and emerging market economies. [10] ................................................. 8
Initiation of Financial Crises in Advanced Economies ................................................ 8
2.05 The two ways in which government can finance its deficit is through monetizing
the debt and printing money. Explain each of these two ways in detail and what
happens to monetary base and money supply. [10] ................................................. 10
