Q3: Consider a small country which is trying to develop and expand its economy sustainably.

a/ Using the circular flow of income model as an illustration, show what actions it can take in the government and trade sectors to stimulate the economy. Provide examples of some specific economic actions and explain how these actions can lead to economic growth. (10 marks)

b/ What is the role of technology in an economy? Discuss the significance of technology and its impact on the economy of a small country? Provide some examples of how investment in technology can have both a positive and negative impact on the long-term sustainability of the economy? (Hint: consider the concept of "externalities"). (5 marks)

d/ If the central bank and the government of this economy wishes to stimulate investment without causing high inflation, should it use domestic or foreign bonds to achieve this? Please use diagrams to explain your answer where applicable. (10 marks)