The Zambian finance minister then, DR. Bwalaya Ng'andu delivered the 2020 National Budget presentation on Friday 27th September, 2019. An extract from this presentation reads " Mr. Speaker, Government will continue to peruse open economy policies aimed at encouraging trade, attracting and accumulating international reserves. In this regard, Government will continue to promote export diversification and maintain a liberal foreign exchange regime... Mr. Speaker, over the first half of 2019, the current account deficit narrowed to US$ 414.4 million or 1.7 percent of GDP from US$586.1 million or 2.2 percent of GDP during the same period in 2018. This was due to a larger decline in imports relative to exports.

REQUIRED : a) As a trade expert, would you expert the depreciation or devaluation of the Kwacha to eliminate or reduce the deficit in Zambia's current account or balance of payments?

b) Explain how the following factors affect the A Zambian Kwacha's exchange rate under a system of market :

i. A rise in the Zambian price level, with the foreign price level held constant

ii. Tariffs and quotas placed on Zambia's exports AND DECREASED Zambia demand for imports

iii. Increased demand for Zambia's exports and and decreased Zambia demand