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Cfu 103 Introduction To Macroeconomics Question Paper

Cfu 103 Introduction To Macroeconomics

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2012

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UNIVERSITY EXAMINATIONS: 2011/2012
YEAR 1 EXAMINATION FOR THE BACHELOR OF COMMERCE
CFU 103 INTRODUCTION TO MACROECONOMICS (SATURDAY)
DATE: APRIL 2012 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One and Any other Two Questions
QUESTION ONE
a) Country XY had a population of 14 Million people and a GNP of 800 million Kenya shilling In
2011. The government taxes on consumer goods during the year amounted to Kenya shilling
12million. If depreciation on fixed assets during the year was Kenya shilling 60 million and the
government gave the agricultural sector subsidies of Kenya shilling 10million.
Compute the following:
i. NNP at market prices (2 Marks)
ii. NNP at factor prices (2 Marks)
iii. Per capital income (2 Marks)
iv. Interpret the Percapita Income (2 Marks)
b) Explain how the changes in the size, composition and distribution of National Income affect
economic welfare. (8 Marks)
c) Outline the concept of full employment and measures to promote it in a developing country
(5 Marks)
d) ‘’The external value of a national currency depends upon and fluctuates with its internal
Purchasing Power’’. Discuss. (6 Marks)
e) Discuss the functions performed by non-bank financial intermediaries in Kenya (4 Marks)
QUESTION TWO
a) One of the major ways to encourage economic growth in developing nations is to promote export
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to earn income for the domestic industries.
i) What is export led growth to an economy? (4 Marks)
ii) Discuss the impact of export promotion zone on the Kenya’s balance of Payment and
Terms of trade. (6 Marks)
b) In the content of international trade explain the concept of comparative advantage theory
(8 Marks)
QUESTION THREE
a) With a suitable illustration discuss how Phillips curve explain the trade – off between
unemployment and inflation? (8 Marks)
b) Distinguish between monetary and fiscal policy. Explain how these methods are used to solve
macro-economic problems. (6 Marks)
c) Explain the role played by the Central Bank as a manager and custodian of foreign exchange
reserve. (6 Marks)
QUESTION FOUR
a) Highlight the factors that affect consumption function (6 Marks)
b) In the recent past the Kenyan economy experienced high and rising inflation rate which almost
brought the economy to its knee,. Explain the causes and economic consequences associated with
this. (10 Marks)
c) Differentiate between autonomous and induced investment. (4 Marks)
QUESTION FIVE
a) Suppose the structural equation of an economy is given as follows:
Y = C + I
C = 100 + 0.65Y
I = 80
Find the equilibrium value for income, consumption and savings: (6 Marks)
b) Examine the significance of protection in a developing economy (6 Marks)
c) Discuss the common unemployment problems experienced in developing countries. Suggest
suitable remedies. (8Marks)

Cfu 103 Introduction To Macroeconomics Question Paper

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