Question
Consider the Kenyan economy with a Kenya Shilling (KSH) as the domestic currency. Using well-labelled diagrams, of demand and supply of foreign currency, describe the
Consider the Kenyan economy with a Kenya Shilling (KSH) as the domestic currency. Using well-labelled diagrams, of demand and supply of foreign currency, describe the effect of following events on the KSH and Balance of Payment of the Kenya's economy. (Use a different diagram for each event)
Reduction of income tax rate from 30% to 25% which causes the average income to raise in Kenya relative to average income in Rwanda, ceteris paribus. (3 Marks)
Due to COVID-19 pandemic, Kenyans expect a high exchange rate against the US dollar, ceteris paribus. (3 Marks)
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