MUNHUMUTAPA

SCHOOL
OF COMMERCE

NAME : REJOYCE MOYO

REG NUMBER : M222293
PROGRAM : BCOM B M
MODULE : HEC 114

LECTURER : MS MAKAMBA
ATTENDANCE : BLOCK RELEASE
COMMENTS : …………………………………………………..
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Question 1

a) Discuss how changing from a command system to a market system improves society’s
welfare. [15 marks]

Economy without the free market economy is poorer in wealth but the economy that changes
from a command economy to a market economy is rich in wealth. Free market economy is
embraced as one of the leading economy that yields good standards of living.

A free market economy is the one that price is determined by the forces of demand supply with
little or no government interference. It allows the relationships between product supply and
consumer demand to dictate prices. It has brought the following benefits:

Absence of Bureaucracy

Because free markets reduce cost and minimize red tape, they lead to more innovation via
research and development. Entrepreneurs do not have to wait for the government to tell them
what to make. They study demand, research trends, and meet their customers’ needs through
innovation. This independence also encourages competition amongst firms to improve their
products and services.

Competition

The free market allows the creation of competition which suits the consumer; people like to have
options this therefore creates space for producers to create better products cheaply aiming to
achieve a greater hold over the market. In command economy there is no competition this
propelled the change from command economy to free market economy.

Motivational Influence of Free Enterprise

Guided by what’s often called the “invisible hand,” entrepreneurs take economic risks to fulfill
consumer demand. Those entrepreneurs who succeed are rewarded with profits, so this tends to
encourage innovation in the market as a whole.

The invisible hand is an economic concept where market demand acts as signals for producers.
For instance, because consumers want and are willing to pay for bread, bakers have the
economic incentive to produce bread. The concept was originally introduced by Adam Smith in
his 18th-century work The Wealth of Nations.

Consumer Sovereignty
In a free market, producers are incentivized to produce what consumers want at a reasonable and
affordable price. In general, consumers have more choices for what goods and services to
purchase. This choice is called Consumer Sovereignty.

Optimal Allocation of Resources

Resources (aka factors of production) in the market are better distributed and allocated. Since
consumers are willing to pay for a certain quantity of a product, producers are willing to pay to
acquire the raw materials required to produce that product. Otherwise, producers are likely to
produce too much of a good that no one wants. In the same way, it also encourages firms to be
more efficient as they seek to produce at the lowest price possible to maximize their profit.

However, the absence of government control allows free market economies a wide range of
freedoms, but these also come with some distinct drawbacks. These drawbacks show that at
times it is of no benefit to change from command to market economy. The free market can
allows certain resources to be over-valued on false pretences, factors such as insider information
or industrial espionage can lead to price surge or crash. A superficial bubble can be produced, as
a certain resource should crash but people are continually trying to keep it up.

In a command economy the government sets production and growth targets, there is an idea of
the bigger picture on how the economy will perform in the future. This theoretically increases the
economic stability, such as maintaining the value of a currency or given resource (less volatile,
fluctuation a rare occurrence)

Since there is a concentration on immediate gain and short term perspective through the free
market, important services such as education and health tend to be undervalued by consumers. In
a utopian free-market these services would be accurately priced, but this does not occur in
reality.

The government decides on how the country’s wealth is distributed, in theory this stops anyone
from having more money than they “need”. This allows people with service jobs to still have
food, healthcare, and education. This achieves social justice as those with jobs such as janitors
are valued workers. .

Finally, a larger extent beneficial changing from command economy to market economy because
of price mechanism, competition and consumer sovereignty. The drawbacks are just minor and
can be minimized with proper planning. There for it is also appropriate for a nation to engauge in
mixed economy to improve the welfare of the people since it consists of both the command and
market economy.

b) Using practical examples, discuss how the Zimbabwean government can correct market
failures [10 marks]
Governments have three key tools for addressing the market failures of public goods, market
control and externalities which include the following:

Taxes

A third alternative is to make use of coercive government taxes. That is, governments impose to
create disincentives and thus discourage undesirable activities for example road pricing . Taxes
are well-suited for controlling externalities or encouraging the provision of information. For
example, an industry the creates a pollution externality can be encouraged to efficiency if
government imposes a tax equal to the external cost. Alternatively, government subsidies,
effectively negative taxes, can be used to encourage activities and address the market failure
external benefits.

Regulation

A second noted method is the regulation of production, consumption, and exchange decisions
undertaken by the private sector -- businesses and consumers. That is, governments set the rules
of the game, a task they generally undertaken for society, but in this case directed specifically to
the correction of market failures for example Zimbabwean Government regulate the transport
sector that made it difficult for private sector to operate and they were urged to Join Zupco
during the covid 19 lock down. Government regulations are commonly used to address the
market failures of market control, externalities, and imperfect information. For example, the
price of a firm with significant market control might be regulated by government. Or government
might restrict the amount of pollution emissions from a particular productive activity.
Regulations requiring sellers to provide information to buyers is a means of addressing the
market failure of imperfect information.

While market failures can be corrected, in principle, only through some sort of government
action, government intervention does not guarantee a solution nor an efficient allocation of
resources. The reason is that governments are also imperfect. Governments have their own set of
following inefficiencies:

Re-election Minded Politicians

Leaders who only need to please a majority of those who vote can largely ignore the interests of
others. Once again, any resulting economic policies are not necessarily in the best interest of the
entire economy.

Complex Bureaucracies
Those who work in the large, complex bureaucracies that tend to make up governments, might
not be held responsible for their actions, especially those actions that carry out economic
policies.

Special Interest Groups

In a related matter, when some people don't vote, those who do vote have a greater influence
over an election. Leaders seek to provide satisfaction for those special interest groups with the
greatest influence.

Finally, the intervention by the Zimbabwean Government to addresses market failure have
substantial role in addressing inefficiency in the market though there are arguments against but
have little impact. The intervention generate revenue for the country and discourage undesirable
activities in the market .

Question 2

(a) Distinguish using examples the different factors of production. [5]

(b) Explain why a perfective competitive firm will not charge a price which is higher or lower
than the market determined price. [10 marks]

(c) Explain the factors that affect the elasticity of demand for sugar. [10 marks]

a) Factors of production are categorized into four as shown below:

Labour

Labor is the effort that people contribute to the production of goods and services. Labor
resources include the work done by the waiter who brings your food at a local restaurant as well
as the engineer who designed the bus that transports you to school. It includes an artist's creation
of a painting as well as the work of the pilot flying the airplane overhead. If payment is done for
a job, then have contributed labor resources to the production of goods or services. The income
earned by labor resources is called wages and is the largest source of income for most people.
This is different from the third one in such a way that it include the work done.

Land

Land includes any natural resource used to produce goods and services. This includes not just
land, but anything that comes from the land. Some common land or natural resources are water,
oil, copper, natural gas, coal, and forests. Land resources are the raw materials in the production
process. These resources can be renewable, such as forests, or nonrenewable such as oil or
natural gas. The income that resource owners earn in return for land resources is called rent. This
is different from the second one in such a way that it includes any natural resource used to
produce goods and services.

Entrepreneurship

An entrepreneur is a person who combines the other factors of production - land, labor, and
capital - to earn a profit. The most successful entrepreneurs are innovators who find new ways
produce goods and services or who develop new goods and services to bring to market. Without
the entrepreneur combining land, labor, and capital in new ways, many of the innovations we see
around us would not exist. The most successful entrepreneurs are Henry Ford or Bill Gates and
Strive Masiyiwa .Entrepreneurs are a vital engine of economic growth helping to build some of
the largest firms in the world as well as some of the small businesses in your neighborhood.
Entrepreneurs thrive in economies where they have the freedom to start businesses and buy
resources freely. The payment to entrepreneurship is profit.

Capital

Capital can be used as the machinery, tools and buildings humans use to produce goods and
services. Some common examples of capital include hammers, forklifts, conveyer belts,
computers, and delivery vans. Capital differs based on the worker and the type of work being
done. For example, a doctor may use a stethoscope and an examination room to provide medical
services. A teacher may use textbooks, desks, and a whiteboard to produce education services.
The income earned by owners of capital resources is interest. This is different from the fourth
one in such a way that it is based on the work and type of work done .

b) Perfect competition firms will not charge a higher price or lower than the market price
because if the firm charge a higher than the market price the firm would not sell any of its
products since there are many other firms selling the identical product in the market .The firm
would not have an incentive to charge a price lower than the market price because it can sell all
the output it produces at the market price.

A perfectly competitive firm is a price taker, which means that it must accept the equilibrium
price at which it sells goods. If a perfectly competitive firm attempts to charge even a tiny
amount more than the market price, it will be unable to make any sales for example vegetable
vendor just take the market price, if he wants to charge higher prices for vegetables will Result in
no sales for it has been known by everyone in the market that vegetables cost one $1 per bundle
anything price above one dollar will not accepted that resulted in no sales.
Morever, it is also explained by the equation where average revenue is equal to price AR=P. By
this, it will be difficult for a firm in perfect competition to charger a price above or lower than
the market price. This can be best shown diagramatically as below

From the diagram above price will be equal to average revenue since perfect competitive firm is
known as a price taker so the pressure of competing firms forces them to accept the prevailing
equilibrium price in the market. If a firm in a perfectly competitive market raises the price of its
product by so much as a penny, it will lose all of its sales.

In perfect competition there is perfect information about the price and is known by both buyer
and seller, so the perfect competitive firm cannot charges price above or lower than the market
price for instance the farmer sells his green mealies at price $0.50 each, when he charges $2 each
he will not find any buyer anymore and will lose sales to competitors .

Lastly ,perfect competitive firm cannot charge price above or lower than the market price since
firms in perfect competition are price takers ,so it will be difficult to charge different price from
other players in the market and there is perfect information about the price known by the buyer
and seller.

c) Elasticity of sugar is determined by the following factors:

Population

Increase in population will resulted in increase in demand of sugar since the increase in
population will create large customer base. Decrease in population will resulted in decrease in
demand of sugar.

Quality

An increase in the quality of sugar will resulted increase demand for sugar since individuals
demand high quality than poor quality for example brown sugar have high demand because of its
quality than white sugar. Decrease in the quality of sugar will resulted in decrease in demand for
sugar since individuals prefer higher quality.

Advertising campaign

Increase in advertising campaigns will resulted in increase in demand for sugar. More of sugar
will be bought since advertising campaigns attracts more customers. Decreases in advertising
campaigns will resulted in decrease in demand for sugar .Higher spending in advertising
campaigns has increased Tongaat huletts sales globally.

Income

An increase in disposable income enabling consumers to be able to afford more quantity of sugar
will be demanded. Higher income presents the purchasing power of money there by demanding
more of sugar. Decrease in income will resulted in decrease quantity of sugar demanded.

Seasonality

More of sugar will be demanded in winter than in summer because customers demanded more
tea to warm themselves from cold conditions. This causes shifts on the demand curve. In summer
there will be decrease in demand for sugar since there will be hot temperatures.

Question 3

a) Using the indifference approach, explain how a consumer maximizes satisfaction, clearly
clarifying the assumptions of the theory [10marks]

b) The table below shows the quantity of burgers (quantity x) consumed by a student and the
total utility derived from the burgers.

Quantity 0 1 2 3 4 5 6
x

Total 0 10 16 20 22 22 20
utility
(i) Calculate marginal utility derived from consuming each additional burger.

[2 marks]

(ii) Explain with the aid of a diagram, the law of diminishing marginal utility.

[10 marks]

(ii) At what point does the consumer reaches saturation? [3 marks

a) An Indifference Map represents a Group of Indifference Curves each of which expresses a

given level of Satisfaction. If an Indifference curve Shifts to Right, the Level of Satisfaction goes
on Increasing. From the point of view of satisfaction. This can be shown below

From the diagram satisfaction is achieved at point D where the budget line is tangential to
indifference curve .At any point on the budget line a consumer can maximize his utility among
rational choices.

Assumptions to Indifference Curve Analysis

Rationality of consumer the consumer is rational & aims at maximizing his total satisfaction.
Ordinal utility can be expressed ordinary i.e. Consumer is able to tell only order of his
preferences. Consumer is not over supply goods in question. Properties of Indifference curve.
Higher Indifference curve represents higher satisfaction. This is because the combinations lying
in higher Indifference curve contain more of either one or both goods and more goods are
preferred to Less of goods.

Each indifference curve represents the choices that provide a single level of utility. Every level
of utility will have its own indifference curve. Individual's preferences will include an infinite
number of indifference curves lying nestled together .the indifference curves, representing three
levels of utility, appear on the diagram above. Higher indifference curves represent a greater
level of utility than lower ones.

In conclusive, maximum utility in indifference curves is achieved when l consumer maximizes

his utility where the budget line is tangential to indifference curves .Higher or lower levels of
utility do not require any numerical estimates of utility, either by the individual or by anyone else

b. i)

QUANTITY X TOTAL UTILITY MARGINAL

UTILITY

0 0

1 10 10

2 16 6

3 20 4

4 22 2

5 22 0

6 20 -2

ii): Diminishing marginal utility can be best illustrated using a diagram as below
From the above diagram marginal utility diminishes as individual consumes more of the good.

According to the Law of Diminishing Marginal Utility, marginal utility of a good diminishes as
an individual consumes more units of a good. In other words, as a consumer takes more units of
a good, the extra utility or satisfaction that he derives from an extra unit of the good goes on
falling.

It should be carefully noted that is the marginal utility and not the total utility than declines with
the increase in the consumption of a good. The law of diminishing marginal utility means that
the total utility increases but at a decreasing rate.

Marshall who was the famous exponent of the marginal utility analysis has stated the law of
diminishing marginal utility as follows:

The additional benefit which a person derives from a given increase of his stock of a thing
diminishes with every increase in the stock that he already has.

This law is based upon two important facts. Firstly, while the total wants of a man are virtually
unlimited, each single want is satiable. Therefore, as an individual consumes more and more
units of goods, intensity of his want for the goods goes on falling and a point is reached where
the individual no longer wants any more units of the goods. That is, when saturation point is
reached, marginal utility of goods becomes zero. Zero marginal utility of goods implies that the
individual has all that he wants of the goods in question.

The second fact on which the law of diminishing marginal utility is based is that the different
goods are not perfect substitutes for each other in the satisfaction of various particular wants.
When an individual consumes more and more units of a goods, the intensity of particular want
for the goods diminishes but if the units of that goods could be devoted to the satisfaction of
other wants and yield as much satisfaction as they did initially in the satisfaction of the first
want, marginal utility of the good would not have diminished.

It is obvious from the above that the law of diminishing marginal utility describes a familiar and
fundamental tendency of human nature. This law has been arrived at by introspection and by
observing how people behave. This can be presented using a table as below

Table 2

Cups of tea Total Marginal

utility utility

0 0

1 12 12

2 22 10

Consider Table 2 in which we have presented the total and marginal utilities derived by a person
from cups of tea consumed per day. When one cup of tea is taken per day, the total utility
derived by the person is 12 units. And because this is the first cup its marginal utility is also 12.

With the consumption of 2nd cup per day, the total utility rises to 22 but marginal utility falls to
10. It will be seen from the table that as the consumption of tea increases to six cups per day,
marginal utility from the additional cups goes on diminishing (i.e., the total utility goes on
increasing at a diminishing rate.

However, when the cups of tea consumed per day increase to seven, then instead of giving
positive marginal utility, the seventh cup gives negative marginal utility equal to -2. This is
because too many cups of tea consumed per day (say more than six for a particular individual)
may cause him acidity and gas trouble. Thus, the extra cups of tea beyond six to the individual in
question give him disutility rather than positive satisfaction. A diminishing rate.
iii) Saturation point reaches its maximum level of 20utils is achieved. The consumer always
tends to move to a higher indifference curve seeking for higher satisfaction. Total utility starts
declining as fifth unit is consumed .Marginal utility curve decreases as consumption of good x
increases. At the point fifth unit where total utility is at maximum, marginal utility reaches zero
and becomes negative.

Question 4

a) With reference to the Zimbabwe, what are the major reasons why economic agents hold
money?    [5 marks]

Discuss the various policy instruments that can be used by the Reserve Bank of Zimbabwe to
directly control aggregate demand in Zimbabwe.
[10 marks]

(c) "There are some general characteristics that are usually important for whatever serves as
money." Discuss any five characteristics of money in Zimbabwe.
[10 marks]

a) The major reasons why economic agents in Zimbabwe hold money include the following:

Transaction Motive

Economic agents needs cash for making transactions in the day to day operations. The cash is
needed to make purchases, pay expenses, taxes, dividend, etc. The cash needs arise due to the
fact that there is no complete synchronization between cash receipts and payments. Sometimes
cash receipts exceed cash payments or vice-versa. The transaction needs of cash can be
anticipated because the expected payments in near future can be estimated. The receipts in future
may also be anticipated but the things do not happen as desired. If more cash is needed for
payments than receipts, it may be raised through bank overdraft. For instance in Zimbabwe there
is Agri Bank which offers bank over drafts ,so economic agents can raise cash in form of over
draft .

Precautionary Motive

Agents is required to keep cash for meeting various contingencies. Though cash inflows and cash
outflows are anticipated but there may be variations in these estimates. For example, a debtor
who was to pay after 7 days may inform of his inability to pay; on the other hand a supplier who
used to give credit for 15 days may not have the stock to supply or he may not be in a position to
give credit at present. In these situations cash receipts will be less than expected and cash
payments will be more as purchases may have to be made for cash instead of credit. Such
contingencies often arise in a business. Agents keep some cash for such contingencies or it
should be in a position to raise finances at a short period. The cash maintained for contingency
needs is not productive or it remains ideal. However, such cash may be invested in short-period
or low-risk marketable securities which may provide cash as and when necessary.

Speculative Motive

The speculative motive relates to holding of cash for investing in profitable opportunities as and
when they arise. Such opportunities do not come in a regular manner. These opportunities cannot
be scientifically predicted but only conjectures can be made about their occurrence. For example,
the prices of shares and securities may be low at a time with an expectation that these will go up
shortly. The prices of raw materials may fall temporarily and a firm may like to make purchases
at these prices. Such opportunities can be availed of if a firm has cash balance with it. These
transactions are speculative because prices may not move in a direction in which we suppose
them to move. The primary motive of a firm is not to indulge in speculative transactions but such
investments may be made at times.

b) Reserve Bank of Zimbabwe may implement fiscal policies and monetary policies to directly
control aggregate demand which include the following:

Contractional monetary

Tight or contractionary monetary policy that leads to higher interest rates and a reduced quantity
of loanable funds will reduce two components of aggregate demand. Business investment will
decline because it is less attractive for firms to borrow money, and even firms that have money
will notice that, with higher interest rates, it is relatively more attractive to put those funds in a
financial investment than to make an investment in physical capital. In addition, higher interest
rates will discourage consumer borrowing for big-ticket items like houses and cars. Conversely,
loose or expansionary monetary policy that leads to lower interest rates and a higher quantity of
loanable funds will tend to increase business investment and consumer borrowing for big-ticket
items.

Neutral fiscal policies

Neutral fiscal policy, usually undertaken when an economy is in equilibrium. Government

spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on
the level of economic activity.
Contractionary fiscal policy

Contractionary fiscal policy, which occurs when government spending is lower than tax revenue,
and is usually undertaken to pay down government debt, which in turn affects several
components of aggregate demand.

Expansionary monetary policy

An expansionary (or loose) monetary policy raises the quantity of money and credit above what
it otherwise would have been and reduces interest rates, boosting aggregate demand, and thus
countering recession. A contractionary monetary policy, also called a tight monetary policy,
reduces the quantity of money and credit below what it otherwise would have been and raises
interest rates, seeking to hold down inflation. During the 2008–2009 recession in Zimbabwe,
central banks around the world also used quantitative easing to expand the supply of credit.

Finally, various policies can directly control aggregate demand when there are well monitored.
However ,some polices like contractionary monetary policy reduces the quantity of money and
raises interests rates that may further worsening recession Zimbabwe( 2008_2009).

c) In Zimbabwe ,the Zimbabwean dollars and United States dollars many characteristics some
are value less whilst some are of great value which include the following:

Uniformity

Uniformity means that all types of the same denomination of money must consist of purchasing
power. It is a characteristic to perform the function of standard of deferred payments.
(SubraMoney, 2011).

Durability

Money is able to withstand all the hardships and is still able to maintain to be undamaged and
usable after a long term of usage. (SubraMoney, 2011). Durability is crucial for money to be able
to perform the following functions of medium of exchange and store of value. Coins and paper
bills are made to perform and to act as the currency. Nowadays, Money is manufactured with the
materials such as paper, metal and plastics, which results to a long lasting medium.
(SubraMoney, 2011)

Portability

Portability, which also serves as a medium of exchange, (Money Characteristics, 2011) means
that money can be movable from place to place to be used as monetary transaction to be
exchanged for goods and services. Portability also means that consumers are now able to carry
money along with them to be used as transactions for goods and services. In modern days,
money is carried from one location to another without needing much effort as all types of money
such as cash notes, coins and cards are carried easily in a wallet. (SubraMoney, 2011).

Divisibility

Divisibility is a characteristic which means the money can be divided into small units and that it
can be used in exchange for goods and services. As to function as the medium of exchange, as it
is divisible, it can be used to purchase all kinds of goods with different values. As money
functions as the medium of exchange it must have denominations to be traded for all goods and
services, and everything in between. (Money Characteristics, 2011).

Limited supply

Limited supply is a characteristic which helps in storing the value of money, meaning that
constraints on the amount of money in the monetary circulation ensure that values remain
constant for the currency. Currently most of the respective country’s government has the
responsibility to control an adequate money supply based on market with their monetary policies,
such as expansionary monetary policy and contractionary monetary policy. (SubraMoney, 2011).

Question 5

a)Economists generally agree that free trade promotes economic growth and is good for
consumers. Discuss this statement. [15 marks]

b)Explain any five forms of trade barriers that can be used in an economy to protect its domestic
industry. [10 marks]

a) In reality, free trade promotes economic growth and is good for consumers as it enables
nations to specialize in activities in which they have a comparative advantage; in other words,
what they can produce at a relatively lower opportunity cost, and trade for what they would
otherwise have to produce at a higher opportunity cost. This means nations produce more goods
and services for less and exchange those for goods and services from other countries, resulting in
higher levels of consumption than would be possible without free trade.

Furthermore, Trade barriers are not goods than free trade in such a way that tariffs raise prices
and reduce available quantities of goods and services for businesses and consumers, which
results in lower income, reduced employment, and lower economic output .There by reduces
economic growth.

Openness to trade enhence investment has substantially contributed good relationships within
countries. Investors are attracted by free trade thereby investing business in an economy, creating
employment locally and promote industrialization in a country which inturn promotes economic
development and growth.
Moreover, Free trade enhence productivity .It increases as resources flow to the economic
activities in which a country has a comparative advantage. This leads to employment gains
where production is most efficient and increases standards of living. Thereby promoting
economic growth through local firms creating excess production .

However, free trade is condemned for accelerating consumption of harmful products to the
country for example drug abuse .This will not encourage economic growth but to harm the
economy.

Free trade also blamed for causing deindustrialization of which it lowers the economic growth of
an economy. Since domestic industry will fail to fight competition since a country will rely on
importation.

In conclusion, free trade brought more economic harm rather than benefits in promoting
economic growth. Therefore, Trade restrictions are the best in promoting economic growth of the
economy. Currently policy makers are emphasizing trade restrictions.

b) Trade barriers are meant to protect the local industries thereby creating employment
locally .Trade barriers come in five forms which include the following:

Tariff Barriers

These are taxes on certain imports. They raise the price of imported goods making imports less
competitive. There by restricting all imports so that individuals will switch to local industries
which are competent .expensive (tariff barriers) or prevent trade completely ( trade
embargo).This lowers the demand for goods imported.

Non-Tariff Barriers

These involve rules and regulations which make trade more difficult. For example, if foreign
companies have to adhere to complex manufacturing laws it can be difficult to trade.

Quotas

This involves a limit placed on the number of imports to be imported. This will forces firms that
rely on importation to switch to local firms.
Subsidies

A domestic subsidy from government can give the local firm a competitive advantage. There by
increasing production of outputs .

Embargo

A complete ban on imports from a certain country. For example US embargo with Cuba. This
has the effect that all firms that rely on imported raw materials will closure.

In conclusive, trade barriers are good for boosting locally industries by creating employment to
the locals that inturn enhence economic growth for the economy .The economy will promote
sustainable development.
References

Cathleen D. Cimino-Isaacs, “U.S. Trade Policy Primer: Frequently Asked Questions,”

Congressional Research Service, April 2, 2018.

Scott C. Bradford, Paul L. E. Grieco, and Gary Clyde Hufbauer, “The Payoff to America from
Global Integration,” Peterson Institute for International Economics, Jan. 1, 2005,
https://piie.com/sites/default/files/publications/chapters_preview/3802/2iie3802.pdf.

Council of Economic Advisers, “Chapter 4: The Benefits of Open Trade and Investment
Policies,” 132.

Mack Ott, “International Capital Flows,” in David R. Henderson, ed., The Concise
Encyclopedia of Economics (Indianapolis: Liberty Fund Inc., 2002),
http://www.econlib.org/library/Enc/InternationalCapitalFlows.html.

The illustration is based on Frederick Bastiat’s Selected Essays on Political Economy: “The
Balance of Trade,” www.econlib.org/library/Bastiat/basEss.html?chapter_num=16#book-reader.

Adam Smith, “Of Restraints upon the Importation from Foreign Countries of such Goods as can
be Produced at Home,” in An Inquiry into the Nature and Causes of the Wealth of Nations.

Scicome, “Don’t Blame Free Trade. We Don’t Have it,” Foundation for Economic Education,
Nov. 21, 2016, https://fee.org/articles/dont-blame-free-trade-we-dont-have-it/.

Dean Russell, “Tariffs Kills Jobs,” Foundation for Economic Education, Feb. 1, 1962,
https://fee.org/articles/tariffs-kills-jobs/.

Chad P. Brown, “The Element of Surprise Is a Bad Strategy for a Trade War,” Peterson Institute
for International Economics, April 16, 2018, https://piie.com/commentary/op-eds/element-
surprise-bad-strategy-trade-war.

Cash: An Inventory Theoretic

Approach”, Quarterly Journal of Economics, 66 (4): 545–556.

Brulliard, K. (2008) Zimbabwe turns to the Greenback, Washington Post.

Cagan. P. (1956). “The Monetary Dynamics of Hyperinflation” in Friedman M (ed)

Studies in the Quantity Theory of Money: University of Chicago Press.

Chagonda T. (2010). “Dollarization of the Zimbabwean Economy: Cure or curse? The case

of the Teaching and Banking Sectors”, Post-Doctoral Fellow, Department of Sociology.