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(a) To what extent does the prevailing market rate of interest influence the performance of an economy? (6 marks) (b) Argue for and against interest

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(a) To what extent does the prevailing market rate of interest influence the performance of an economy? (6 marks) (b) Argue for and against interest rate decontrols. (6 marks) (c) In a given economy, the nominal rate of interest is ten per cent while inflation is twelve per cent. Determine the real rate of interest. (2 marks) (d) Explain the factors that have caused banking crises in developing economics. (6 marks) (Total: 20 marks)A random sample x1, ..., No is drawn from a N(5,2") distribution. Evaluate: (i) P[Ex > 60] [3] (ii) P E(X- X)2> 34 [2] (iii) P X > 4 and !( X -X)2

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