A. Referring to the diagram and using macroeconomic measures such as, GDP, inflation, nominal exchange rate between the USD and Japanese Yen, Nikkei 225 Stock Index, and the Urban LandPrice Index in Japan, summarise the major economic development in Japan since 1985, with special reference to Plaza Accord and the crash of the “bubble economy” [5 marks]

B. Identify TWO (2) issues which might have contributed to the slowing-down of the Japanese economy during this period and explain how the Abe Administration in Japan implemented policies to address these two issues. [5 marks]

2) Question 4. This question is about the 1997 Asian Financial Crisis [10 marks]

A. “The 1997 Asian Financial Crisis (AFC) was solely caused by issues with exchange rates.” Do you agree with this statement? What is the nature of these exchange rates issues? Could a similar crisis occur today or are Asian countries better placed to deal with such a crisis? Use valid real-life examples in your answer. (5 marks)

B. What did IMF suggest fighting with the AFC? Which countries followed these suggestions? Why did the IMF policy recommendations lead to further crisis in the financial sector and subsequently a crisis in the real economy in these countries? (5 marks)

Sample Solution