PART B (15 marks) Consider yourself as manager of NextGen Wealth Ltd. As a manager of NextGen Wealth Ltd, one of your assignments is to monitor Ghana economic conditions so that you can forecast the demand for products sold by your firm. You realize that the central Bank implements monetary policy-and that the government implements spending and tax policies, or fiscal policyto affect economic growth and inflation. However, it is difficult to achieve high economic growth without igniting inflation. Although the central bank is often said to be independent of the incumbent administration or government in office, there is much interaction between monetary and fiscal policies. Assume that the economy is currently stagnant and that some economists are concerned about the possibility of a recession. Yet some industries are experiencing high growth, and inflation is higher this year than in the previous five years. Assume that the Central Bank Governor's term will expire in four months and that the president of Ghana will have to appoint a new Governor (or reappoint the existing Governor). It is widely known that the existing Governor would like to be reappointed. Also assume that next year is an election year for the administration. B) i. Given the circumstances, do you expect that the administration will be more concerned about increasing economic growth or reducing inflation? (3marks) ii. Given the circumstances, do you expect that the Central Bank will be more concerned about increasing economic growth or reducing inflation? (4marks) iii. Your firm is relying on you for some insight on how the government will influence economic conditions and therefore the demand for your firm's products. Given the circumstances, discuss is your forecast of how the government will affect economic conditions? (8marks) PART B (15 marks) Consider yourself as manager of NextGen Wealth Ltd. As a manager of NextGen Wealth Ltd, one of your assignments is to monitor Ghana economic conditions so that you can forecast the demand for products sold by your firm. You realize that the central Bank implements monetary policy-and that the government implements spending and tax policies, or fiscal policyto affect economic growth and inflation. However, it is difficult to achieve high economic growth without igniting inflation. Although the central bank is often said to be independent of the incumbent administration or government in office, there is much interaction between monetary and fiscal policies. Assume that the economy is currently stagnant and that some economists are concerned about the possibility of a recession. Yet some industries are experiencing high growth, and inflation is higher this year than in the previous five years. Assume that the Central Bank Governor's term will expire in four months and that the president of Ghana will have to appoint a new Governor (or reappoint the existing Governor). It is widely known that the existing Governor would like to be reappointed. Also assume that next year is an election year for the administration. B) i. Given the circumstances, do you expect that the administration will be more concerned about increasing economic growth or reducing inflation? (3marks) ii. Given the circumstances, do you expect that the Central Bank will be more concerned about increasing economic growth or reducing inflation? (4marks) iii. Your firm is relying on you for some insight on how the government will influence economic conditions and therefore the demand for your firm's products. Given the circumstances, discuss is your forecast of how the government will affect economic conditions? (8marks)
