(a)[8]
- What is the overall movement in the value of the Zambian kwacha from January 2014 to September 2015 shown in Fig. 1? [1]
- Explain why China’s economic slowdown has led to this change in the value of the kwacha. [3]
- Explain how the change in the value of the kwacha may feed into inflation in Zambia. [4]
(b)[6]
Explain how the fall in China’s demand for copper is likely to affect each component of aggregate demand in Zambia.
(c)[6]
Consider whether economic theory would support the view that diversification of the Zambian economy is the best way of dealing with the problems it faces as a result of China’s economic slowdown.