Get premium membership and access revision papers, questions with answers as well as video lessons.

Got a question or eager to learn? Discover limitless learning on WhatsApp now - Start Now!

Eae 401: Monetary Theory And Policy Question Paper

Eae 401: Monetary Theory And Policy

Course:Bachelor Of Economics

Institution: Kenyatta University question papers

Exam Year:2012

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2011/2012
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF ECONOMICS

EAE 401: MONETARY THEORY AND POLICY

DATE: Wednesday, 4th April,2012 Time: 4.30 pm- 6.30 pm

INSTRUCTIONS: Attempt question ONE and any other TWO questions

Question one
a) Distinguish between monetary policy and monetary theory (6marks)
b) Explain the workings of any three monetary policy instruments and highlight their limitations in development economies (12marks)
c) Distinguish between monetarists and Keynesian views of the causes of inflation.
(12marks)

Question two
a)Distinguish between the Keynesian and Tobin's models of money demand. What are the limitations of each model? (8marks)
b) Explain any four channels of monetary policy transmission mechanism (12marks)

Question three
a) Illustrate and explain the Philips curve phenomenon. To what extent is it relevant to development economies. (12marks)
b) What are the influencing variables of money demand in an emerging economy such as Kenya?
(8marks)
Question four
a) Illustrate by use of appropriate diagrams, the effects of an expansionary monetary policy on the equilibrium values. (12marks)
b)What is the relationship between rate of interest and bond prices? (8marks)

Question Five
a) Explain any four determinants of money supply. (10marks)
b) Distinguish between fixed and flexible exchange rate. how does this distinction influence the implementation and working of a monetary policy? (10marks)

***********************************************

page 2 of 2

Eae 401: Monetary Theory And Policy Question Paper

More Question Papers

Popular Exams