CASESTUDY

On September 5 Robert wrote to Cameron offering to sell 50 metric tons of wheat at $250 per metric tonne. On September 7 Cameron posted a reply in which he accepted Robert's offer but added that if he did not hear to the contrary he would assume that the price included delivery to his (Cameron's) warehouse. The following morning, before Cameron's letter arrived at Robert's office, Robert read a posting on the internet which stated that the price of wheat was about to fall and he immediately sent an email to Cameron stating 'our price of $250 includes delivery'.

On receiving Robert's email at 10am on September 8, Cameron posted a letter to Robert confirming his acceptance of Robert's terms. By mid-day, however, Cameron also saw the posting on the internet which indicated that wheat prices were about to fall and, having considered the matter, sent an email to Robert stating 'I do not accept your offer of wheat'.

The price of wheat fell to $230 per metric tonne and Cameron refuses to accept any wheat from Robert.

Question 1:

Advise Robert regarding the above

QUESTIONS

1.Economies is concerned with allocation of scarce resources ' outline three resources allocation decisions in an economy

2.Discuss the importance of the concept of opportunity cost in an economy

3.Suggest four contractionary monetary policy measures that could be used to combat the level of inflation in a developing country

4.Explain the monetary views on the quantity theory of money

5.'there have been deliberate attempts to control the rate of interest in some developing countries'

6.Explain five advantages of rate controls in an economy

7.Describe three ways in which a government could use fiscal policy to stimulate economic growth in a country

8.Explain three motives of holding money as an advanced by the Keynesian liquidity preference theory

9. Describe five instruments of monetary policy that could be used to control the level of money supply

10Describe five factors that limit the effectiveness of monetary policy in developing countries and states

11Suggest four contractionary monetary policy measures that could be used to combat a high level of inflation

12Explain four factors that limit or could limit the effectiveness of credit creation by commercial banks

13Argue for and against a fixed exchange rate system in an economy. Give valid explanations or illustrations where necessary