SECTION A - COMPULSORY QUESTION (TOTAL; 20 marks) QUESTION 1 The Zambian government expects its economy to grow at 4% per year in the medium term and is focused on resolving the country's debt crisis. According to the Bank of Zambia, the economy grew 3.6% in 2021 after a 2.8% contraction in 2020, when Zambia became the first African country to default on its sovereign debt during the COVID-19 pandemic. a) How can Zambia grow its Gross Domestic Product (GDP)? (5 Marks) b) Give 5 weaknesses of using the GDP as a measure of standard of living. (5 Marks) c) An economy's consumption function is given as C = 50 + 0.7Y i. If investment in a year is K250, what will be the equilibrium level of income output? (5 Marks) . If full employment level of income (i.e. level of potential output is K 1000), what investment is required to ensure equilibrium at full employment. (5 Marks) [20 MARKS] SECTION B - ATTEMPT FOUR QUESTIONS (TOTAL: 40 marks) QUESTION 2 a. What is meant by balance of payments (BOP)? (4 Marks) b. What are the four functions of the Bank of Zambia? (2 Marks) c. Discuss any four tools of monetary policy. (4 Marks) [ 10 MARKS) 2Monetary and Fiscal policy are stabilization policies used to achieve certain macroeconomic objectives. Outline three objectives and clearly explain how each of them is measured? (6 Marks) b) Discuss four negative effects on unemployment on an economy. (4 Marks) [ 10 Marks)QUESTION 3 Discuss clearly. with illustration, the relationship portrayed by the Standard Phillips Curve, Also explain the criticisms levelled by Friedman and Phelps against the Standard Phillips Curve. QUESTION 4 [10 MARKS] Write explanatory notes on the following economic terms. Your response should show full understanding of the concept and how it applies to macroeconomics. a) Budget deficits b) The business cycle c) Stagflation d) Cost push inflation. (2.5 Marks Each) [10 Marks] QUESTION S Zambia has ratified the agreement to joining the Africa Continental free Trade Agreement midst resistance from some of its citizen. The government is at pains to convince its citizens on the benefits of being part of the large trade community in the world. a) Discuss any five benefits of Zambia being part of this community. (5 Marks) b) Discuss five characteristics of a good tax system, (5 Marks) [10 Marks] QUESTION 6 With the aid an illustration, Discuss the following theories of International Trade a) Comparative Advantage (6 Marks) b) Absolute Advantage (4 Marks) QUESTION 7