that you have consulted ul afitto the subject for study). The essay questions for assignment 02 1. Suppose a nation with an open economy and fixed exchange rates is in equilibrium at its natural level of output. Explain, with the aid of a graph the effects of expansionary fiscal policy. (18) 2. Explain the difference between dollarization and an optimum currency area. (10) 3. "The combination of fiscal policy to achieve internal balance and monetary policy to achieve external balance with a fixed exchange rate faces several criticisms". Evaluate this statement briefly. (10) 4. Discuss the portfolio balance approach to the balance of payments, and how it differs from the monetary approach (12)