QUESTIONS

1 Suggest four contractionary monetary policy measures that could be used to combat a high level

of inflation

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

banks

3 Argue for and against a fixed exchange rate system in an economy. Give valid explanations or

illustrations where necessary

4 Explain six causes of the ever rising budget deficits in developing countries

5 Devaluation of currencies of developing countries tends to be ineffective

With reference to this statement, analyze the factors that limit the effectiveness of devaluation

in developing countries

6 With reference to Keynes liquidity preference theory , distinguish between speculative motive

and precautionary motive of holding wealth as money

7 Outline four factors that limit the effective implementation of monetary policy in developing

countries

8 Highlight the limitation on the process of credit creation by commercial banks in a developing

country

9 Summarize five major reasons why unemployment is a major policy issue in developing

country

10 Suggest five policy measures that could be adopted to reduce the level of unemployment in a

country