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)
(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)
