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A reduction in the money supply is likely to
Select one:
a. Decrease deflation
b. Increase the interest rate
c. Increase inflation
d. Reduce the interest rate
Discuss whether the transition of an economy from one that is centrally planned to one in
which resources are allocated through the free market is likely to be of overall benefit to the
citizens of that economy.
SLC,A fancy footwear manufacturing company has an obligation to pay MXN 14 million in 30 days for a recent shipment from Mexico.
The CFO of SLC is contemplating hedging the company’s MXN exposure on this transaction. He collects the below information regarding the interest rates and exchange rates, from her forex trader:
Spot Rate: MXN 20.08 / USD
Forward Rate: MXN 20.28 / USD
30-day Put Option on USD MXN 19.50 / USD: 1% Premium
30-day Call Option on USD MXN 20.50/ USD: 3% Premium
USD 30-day interest rate (annualized): 7.5%
MXN 30-day interest rate (annualized): 15%
You are required to answer the below questions to assist the CFO:-
a. What are the hedging options available to SLC? What is the hedged cost of SLC payable using a forward market hedge and using a put option hedge?
b. What is the hedged cost of SLC payable using money market hedge?
If you were sitting as Federal Reserve chairman, what measures would you have taken to avoid the crisis? [30 Marks]
Detail the relationship of the Zambia financial system and the economy using practical examples [40 Marks]
Why is stagflation a problem for any economy
Forecast demand using 3-month and 5-month moving averages and suggest which forecast would you accept.
Quarter market share
1 20
2 22
3 23
4 24
5 18
6 23
7 19
8 17
9 22
10 23
11 18
12 23
QUESTION
The notion of Structural Adjustment Programmes (SAPs) being effective in, and necessary for, achieving African development would likely be favored by the Bretton Woods institutions— the IMF and the World Bank—the creators of them (Chabal & Deloz, 1999: 119). To assist African development, Structural Adjustment Programmes (SAPs) provided “conditional lending” (Thomson, 2010: 197). Throughout the 1980s and 1990s, the U.S. has been a principal force in imposing Structural Adjustment Programs (SAPs) on most countries of the South. REQUIRED Discuss the expected impact and outcome of the Structural adjustment programs (SAPs) provided by the International Monetary Fund (IMF) and the World Bank (WB) in Third World countries with special reference to Zambia.
In economics, the "long-run" is referred to as
