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Eae310:Economics Of Money And Banking Question Paper

Eae310:Economics Of Money And Banking

Course:Bachelor Of Economics

Institution: Kenyatta University question papers

Exam Year:2013

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATION 2012/2013
SECOND SEMESTER EXAMINATION FOR THE DEGREE BACHELOR OF ECONOMICS
EAE310:ECONOMICS OF MONEY AND BANKING
DATE:Wednesday 10 April 2013 TIME 8.00-10.00AM
INSTRUCTIONS;Attempt question ONE and any other TWO questions.
1.Briefly explain, giving examples the following terms and concepts as used in money and banking
i)Open market operation (3marks)
ii)Demand deposit (3 marks)
iii)Precautionary demand for money (3marks)
iv)Credit creation (3 marks)
v)Fiduciary issue (3marks)
b)using an illustration explain liquidity trap as used in Keynesian theory.(8marks)

c)Explain the limiting factors credit creation.(7 marks)

2a)Explain the classical theory of demand for money.(14marks)

b)What are the main critics of this theory. (6marks)

3a)Discuss the main disadvantages of an economy in which incomes are paid in kind and transactions are carried out by barter. (10marks).

b)Money can only be defined by its function."Discuss.(10marks)

4a)Explain the difference between commercial banks and non-bank financial institutions.
(10 marks)

b)Describe the role that non bank financial institutions play in facilitating economic development in a country.(10 marks)

5a)What factors determine the rate of interest in an economy.?(10marks)

b)Discuss some of the consequential economic impact of high and rising rate of interest.(10 marks)

Eae310:Economics Of Money And Banking Question Paper

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