Question One
Read the Chapter 13 ‘National Income Accounting and Balance of Payment in ‘KOM’ textbook and list and
Relevance of response;
Accuracy of information/cogency of argument;
Clarity of expression and succinctness;
Comprehensiveness of argument; and
Ability to communicate findings
Marks may be deducted for assignments that are substantially outside(i.e.>10% or <10%) this word limit. A
reference list/ demonstrated links to corresponding readings must be provided.
This Assessment is based on Lecture week 9-10 materials: (Ch. 14, 15 & 16 KOM)
There are Two Questions in this Assignment. Answer all questions. Answer all parts of each question selected
Question One (10 Marks)
Let us assume that the Central Bank has the ability to control reserves and the money multiplier is constant.
What does the Quantity theory of money (QTM) imply about the role of the Central Bank? (5 marks)
Why are many economists critical of the QTM as a theory of inflation? (5 marks)
Question Two (5 marks)
Imagine that you manage a Singaporean company that imports components from Australia and uses these to
manufacture specialised automobile parts such as brakes and suspension, and then exports its finished
products. By June 2020, the exchange rate of the Australian dollar has depreciated to around U.S. 60 cents.
Outline the advantages and disadvantages of this exchange rate depreciation for your firm