BUSINESS ECONOMICS

BUSINESS ECONOMICS-MAN0130L The individual assignment for Business Economics MAN 0130L should be 1,750 words (maximum), excluding footnotes and bibliography, to be submitted by the submission deadline. This assignment should be typed using any word-processing software such as MS Word or Open O?ce. Write a clearly written document, preferably typed using Times Roman size 12 fonts and one-half spacing. Submit the electronic copy of your assignment to Turnitin on your Blackboard latest by 11.00 PM Saturday 02nd May 2015. Drop the hard copy in the wooden box outside the UG office latest by 3.00 PM Sunday 03rd May 2015. Answer ALL questions. B. Assume that the Minister of Finance is responsible for fiscal policy and the Central Bank is responsible for monetary policy. These two policy makers have two options: (i) to agree in the mixture of policies (i.e. both follow a contractionary or an expansionary policy) OR (ii) to disagree in the mixture of policies (i.e. one follows contractionary policy and the other follows expansionary policy). The choices are concisely described in the following table (with the numbers within the matrix showing the payoffs to each policy maker): Minister of Finance Contractionary Policy    Expansionary Policy Contractionary Policy    3, 2    0, 0 Expansionary  Policy    0,0    2, 3 Central Banker 1) What is/ are the Nash equilibria? Explain your answers.                     (20 marks) 2) If we assume that the case of disagreement is detrimental for the economy, analyse the best choices for the two policy-makers.                           (20 marks)