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Introduction To Macroeconomics Question Paper

Introduction To Macroeconomics

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2009

UNIVERSITY EXAMINATIONS: 2009/2010
FIRST YEAR STAGE 3 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFU 103: INTRODUCTION TO MACROECONOMICS
(DAY CLASS)
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer Question ONE and Any other TWO Questions
QUESTION ONE
a) Explain how the theory of comparative advantage and increased specialization has been
utilized through international trade (5 Marks)
b) By use of a diagram discuss the gains resulting from trade between the two countries
(5 Marks)
c) How has international trade contributed to Kenya’s balance of payment equilibrium?
(3 Marks)
d) Discuss the limitations of using per capita income to compare a standard of living
between two countries. (3 Marks)
e) Explain the difference between cost push and demand pull inflation. (5 Marks)
f) Protection can take different forms, discuss each form ( 5 Marks)
g) With the assistance of a diagram, show the multiplier effect accruing from international
trade and investment in countries A & B. ( 5 Marks)
2
QUESTION TWO
a) The Central Bank has many ways of controlling the supply of money in order to influence
credit conditions in the money Market. Discuss five (5) ways of influencing money supply
(5 Marks)
b) With the aid of a diagram, explain Keynesian demand for money ( 5 Marks)
c) How do governments use interest rates as a monetary policy instrument? Give example
(5 Marks)
d) By use of a diagram show why the negative relationship between investment and rate of
interest is called Investment Demand Function ( 5 Marks)
QUESTION THREE
a) Explain Keynesian determination of interest rate. ( 5 Marks)
b) What is balance of payment (BOP) and what are the types of accounts? ( 5 Marks)
c) What is the difference between natural rate of un employment and cyclical unemployment
(5 Marks)
d) Unemployment rate is defined as the percentage of labour force that is unemployment. How do
we calculate unemployment? ( 5 Marks)
QUESTION FOUR
a) What are the advantages of Kenya being a member of International Monetary Fund
(IMF) (8 Marks)
b) Research suggests that there are four determinants of growth of total output. Explain
each of them ( 6 Marks)
c) Hoe do shifts in aggregate demand and aggregate supply affect economic growth?
(6 Marks)
QESTION FIVE
a) Discuss the various functions of money ( 4 Marks)
b) What is money? Name the various kinds of money. What constitutes “double coincidence
of wants”? ( 6 Marks)
c) By use of a diagram show how taxation is used when calculating the country’s GNP?
(10 Marks)

Introduction To Macroeconomics Question Paper

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