You will answer any TWO questions from this section.Your essay should not exceed three pages.Please follow this page limit.If you use graphs, keep them of visible size, not too large.

Question 1:Suppose your country has a fixed exchange rate regime and is currently facing a Balance of payment crisis.One of the policy options for your Central Bank (in response to this Balance of payment crisis) is to conduct devaluation.However, devaluation has its own set of costs.As a policy analyst, you have been asked to provide counter-arguments to this policy.Hence, provide FIVE reasons why the central bank should not conduct devaluation (hint: think of the disadvantages).

You must discuss each disadvantage in a separate paragraph.

Question 2:

A major concern in Pacific Island countries is rising unemployment amidst increasing population.Choose any Pacific Island country and describe its labour market (you must discuss in terms of employment by sector and formal and informal employment).Discuss FIVE key challenges faced by the labour market in this Pacific Island country, and propose solutions for any two of the challenges.

You must discuss each challenge in a separate paragraph.

Question 3

Understanding the factors determining economic growth has been a major concern for many years.The Solow growth model and the endogenous growth models are two main theories tested and used in the growth literature.Discuss both these growth models, identifying the major model components, assumptions, primary tools, key insights and the models convergence prediction.You must discuss each of these in a separate paragraph for each theory.

Example:

Solow growth: introduce, define etc

Paragraph: major model components

Next paragraph: assumptions

Next paragraph: primary tools...and so on until convergence prediction.

Then start on endog theory....

Note: we will appreciate if you structure your essay as an intro, body then conclusion.And where mentioned, use separate paragraphs for each different point.