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Introduction To Macro Economics Question Paper

Introduction To Macro Economics

Course:Diploma In Business Management

Institution: Kca University question papers

Exam Year:2009

UNIVERSITY EXAMINATIONS: 2009/2010
STAGE IV EXAMINATION FOR DIPLOMA IN BUSINESS MANAGEMENT
DFU 103: INTRODUCTION TO MACRO ECONOMICS
DATE: DECEMBER 2009 TIME: 1½ HOURS
INSTRUCTIONS: Answer any THREE questions
QUESTION ONE
The table below represents the value of economics transaction for a hypothetical economy in billions
of Kenya Shillings;
Gross National Product 13,000
Net Income form abroad 700
Deprecciation 2,000
Indirect taxes 1,000
Social Security Contribution 800
Corporate Income Taxes 1,500
Undistributed profits 200
Direct personal Taxes 1,000
Population 300
Transfer payments 1,000
Required;
a) From the table above derive the following;
i) Disposable Income (2 Marks)
ii) Net National product at market prices (2 Marks)
iii) Per capita income (2 Marks)
2
iv) Personal Income (2 Marks)
v)National income (2 Marks)
b) Explain five common problems encountered by economist in estimating the national income of
acountry. (5 Marks)
c) Give reasons why it is difficult to compare the national income of one country with that of
another? (5 Marks)
QUESTION TWO
a) With the aid of a suitable diagram, explain the circular flow of income and expenditure of an
economy? (10 Marks)
b) Keynes developed the concept of the multiplier with the intention of arguing that extra
gorvenment spending on public works which is financed by a budget deficit would have a positive
effect on a demand defficient economy, however several factors limit the application of the
multiplier for an economic management.Discuss these factors. (10 Marks)
QUESTION THREE
a) Using appropriate illustration, discuss the typical features of the trade cycle. (8 Marks)
b) Explain how both fiscal and monetary policies are used to influence the perfomance of an
economy. (12 Marks)
QUESTION FOUR
a) Distinguish between the folowing terms ;
(i) Tariffs and Quotas (2 Marks)
(ii) Exchange control and voluntary export restrain(VRS) (2 Marks)
(iii) Balance of payment and balance of trade (2 Marks)
b) The resent/present policy on liberalisation of international trade have been enhanced by a number
of countries yet government of some countries are contemplating a case for protection.Explain
why this is so? (14 Marks)
QUESTION FIVE
Discuss the doctrine of comparative advantage based on the concept of specilization and explain the
bottlenecks often encountered when nations attempt to individually maximise gains from ttrade
through specialization? (20 Marks)

Introduction To Macro Economics Question Paper

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