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Detailed Accurate Answers ECS3701 Assignment 2 Semester 2 2023 (Answers are explained in detail)
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Detailed Accurate Answers ECS3701 Assignment 2 Semester 2 2023 (Answers are explained in detail)
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ECS3701 (DISTINCTION ANSWERS)ASSIGNMENT 2 | SEMESTER 2 2023
DUE: 22 September 2023
ECS3701
ASSIGNMENT 2
SEMESTER 2
22 September 2023
, Questions Covered:
2.01 Explain how financial intermediaries reduce transaction costs thereby allowing
small savers and borrowers to benefit from the existence of financial markets. ......... 1
The process by which financial intermediaries achieve this reduction in transaction
costs unfolds as follows .......................................................................................... 2
2.02 Differentiation of Financial Crisis Factors: Advanced vs. Emerging Market
Economies ................................................................................................................. 3
Advanced Economies ............................................................................................. 4
Emerging Market Economies .................................................................................. 4
2.03 South African Reserve Bank's Monetary Policy Framework............................... 5
Supplementary Tools: ............................................................................................. 6
2.04 Adverse Effects of Inflation on an Economy and Tight Monetary Policy ............. 7
Adverse Effects of Inflation: .................................................................................... 7
Tight Monetary Policy as a Counter-Inflationary Measure: ..................................... 7
2.05 Advantages and Disadvantages of Monetary Policy Channels .......................... 8
Advantage: Policy Flexibility ................................................................................... 8
Disadvantage: Uncertainty and Complexity ............................................................ 8
QUESTIONS COVERED
2.01 Explain how financial intermediaries reduce transaction costs thereby
allowing small savers and borrowers to benefit from the existence of financial
markets.
Financial intermediaries play a pivotal role in diminishing transaction costs within the
realm of financial markets, thus paving the way for small savers and borrowers to
reap the benefits inherent in these markets. Transaction costs encompass the
1
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