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Money And Banking Question Paper

Money And Banking

Course:Bachelor Of Commerce (Commerce)

Institution: Kabarak University question papers

Exam Year:2012

KABARAK
UNIVERSITY
UNIVERSITY EXAMINATIONS
2011/2012 ACADEMIC YEAR

FOR THE DEGREE OF BACHELOR OF COMMERCE

FNCE 313 – MONEY AND BANKING
DAY: THURSDAY

DATE: 29/03/2012
TIME: 2.00 P.M– 4.00 P.M.

STREAM: Y3S1
INSTRUCTIONS
Attempt Question One And Any Other Two Questions.
QUESTION ONE
a) There are various types of legal tender money. Citing examples distinguish between them in
currency used in Kenya. (4 mks)
b) The central bank of Kenya’s monetary policy committee has been making certain
pronouncements regarding certain banking policies. Discuss the goals of monetary policy
(8 mks)
c) In its static role, the importance of the money lies in removing the difficulties barter .Discuss the
various ways in which money overcomes the difficulties of barter trade (10 mks)
d) The monetary policy can be used by the central bank to control inflation .Discuss the limitations
of monetary policy in controlling inflation ( 8 mks)
(30 mks)
Page 1 of 3

QUESTION TWO
a) Money has the various non-economic defects. Discuss them. (6 mks)
b) The central bank in a developing economy performs both traditional and non-traditional
functions. Discuss the role of central bank in a developing economy (6 mks)

c) The central bank and commercial banks are important institutions that deal with money. Discuss
the differences between central bank and commercial banks (8 mks)
(20 mks)
QUESTION THREE
a) Discuss the factors which determine money supply through the creation of bank credit in Kenya
(5 mks)
b) Discuss the relationship between the supply of money and prices of goods according to the
Keynes’s reformulated quantity theory of money (5 mks)
c) Commercial banks perform a variety of functions in Kenya’s economy. Discuss them (10 mks)
(20 mks)
QUESTION FOUR
a) Discuss the role of monetary policy in a developing economy like Kenya (6 mks)
b) The experience of underdeveloped countries reveals that monetary policy plays a limited
role in such countries. Discuss the limitation of monetary policy in the less developed
countries (6 mks)

c) Paper money refers to notes different denominations made of paper and issued by
the central bank and or the government of the country. Discuss the various types of
paper money (8 mks )
(20 mks)
Page 2 of 3

QUESTION FIVE
a) Various types of commodities have been used as money from the beginning of
human civilization. Discuss the defects of the use of commodities
as money (5 mks)

b) Inflation can, be controlled by increasing the supplies and reducing money incomes
in order to control aggregate demand. Discuss the fiscal measures that can be used
to control inflation (5 mks)

c) Discuss the various factors affecting demand that can cause inflation (10 mks)
(20 mks)

Page 3 of 3

Money And Banking Question Paper

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