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Eet501:Advanced Macroeconomy Theory 1 Question Paper

Eet501:Advanced Macroeconomy Theory 1

Course:Master Of Arts In Economics

Institution: Kenyatta University question papers

Exam Year:2011

KENYATTA UNIVERSITY
SUPPLEMENTARY EXAMINATIONS FOR THE DEGREE OF MASTER OF ECONOMICS
EET501:ADVANCED MACROECONOMY THEORY1

DATE:Saturday 5th Feb 2011 TIME:9.00AM-12.00PM

INSTRUCTIONS:
Answer all the questions

Q1.
(a)The Ministry of trade,foreign trade and development has received information that Japans tradable goods sector comprises $12'000,000.Kenyas tradable goods comprises poorly with this figure and stands at a quarter of it.The total value of goods and services in these two economies stands at $900,000,000 and $5 600,000,000 for Kenya and Japan respectively.Given that the general price level for Kenya is $150,obtain a similar figure for Japan assuming the level of technology is the same (6marks)
(b)Differentiate between the Life Cycle and Permanent Income Hypothesis outlining their relevance in policy (6marks)
(c)Demonstrate your understanding of Ricardian Equivalence Theorem as presented by Barro Robert.Is RET applicable to Kenya?(5marks)
(d)Differentiate between covered interest rate parity and uncovered interest rate parity using elaborate equations(5marks)
Q2.
(a)Assuming two,and with the use of systematic equations,show your understanding of Balasa-Samuelson model (5marks)
(b)Explain some of the data problems in the African context giving relevant examples (5marks)
(c)Derive expressions for fiscal and monetary policy multipliers for an open economy (5marks)
Q3.
(a)With the aid of well labelled diagrams,explain the Mundell-Flemming model with fixed exchange rates under the assumptions of relatively gigh and low capital mobility (5marks)
(b)Demonstrate your understanding of Dornbush model as used in the fiscal approach to the balance of payments (5marks)
(c)Explain the various systems of national accounts used in the collection of national income data (5marks)
Q4.
(a)Demonstrate your understanding of the concept of Dutch disease by giving practical examples (4marks)
(b)Derive equations for a firms desired capital stock and show optimality (6marks)
(c)Differentiate between the efficiency wage and shapiro-stiglitz models of unemployment (8marks)

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Eet501:Advanced Macroeconomy Theory 1 Question Paper

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