Monetary policy has changed in Ethiopia in recent years. The country’s central bank now uses changes in the interest rate rather than controls on bank lending. It has also moved from operating a fixed exchange rate to a floating exchange rate. The Ethiopian Government uses a range of supply‑side policy measures. The government has privatised some sugar processing firms, but most large firms are still state‑owned.

3(a)Interest Rates Money MarketEasy2 marks

Identify two causes of an increase in the demand for bank loans.

Two answers required.

3(b)Supply Side PolicyMedium4 marks

Explain two supply‑side policy measures, other than privatisation.

Answer

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3(c)Types Size BusinessHard6 marks

Analyse how state‑owned firms may benefit a country’s population.

Answer

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3(d)Exchange Rates International CompetitivenessHard8 marks

Discuss whether or not having a fixed exchange rate will benefit an economy.

Answer

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