Exchange rate and protectionism (AS s22)

(a) Explain the various difficulties that confront a country that adopt a fixed exchange rate regime. [8]

(b) There are different methods that countries used to protect their domestic industries.
Is export subsidies always a superior method of protectionism than tariffs. Discuss. [12]

Exchange rate and Expenditure reducing policies (AS-w21)

(a) Describe, with the help of diagrams, how a fixed exchange rate is maintain through central bank interventions. [8]

(b) Discuss the effectiveness of expenditure-reducing policies in tackling large balance of payment deficit in an economy with a floating exchange rate. [12]

Exchange rate and monetary policy (AS-s21)

(a) How do demand and supply factors cause the value of a currency to appreciate in a floating exchange rate regime? Use one example for each demand and supply factors. Substantiate your arguments with diagrams. [8]

(b) Evaluate the likely effectiveness of using monetary policy to tackle inflation in an economy with a floating exchange rate system? [12]

Exchange rate (AS-s20)

(a) Explain, with the aid of a diagram, three demand factors that can result in the appreciation in the exchange rate of a currency. [8]

(b) Among the adverse effect of a strong exchange rate is inflation and higher unemployment. Discuss this view. [12]