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

Monetary Theory And Policy Question Paper

Monetary Theory And Policy

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2008

UNIVERSITY EXAMINATIONS: 2008/2009
THIRD YEAR STAGE 1 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 302: MONETARY THEORY AND POLICY
DATE: DECEMBER 2008 TIME: 2 Hours
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
a) Explain the following:
i) Monetary policy
ii) Classical theory of interest (10 Marks)
b) i) If the deposit multiplier in a given banking system is 10 and that of
all the amount loaned out only 95% is spent. Calculate the total
deposit created when an amount of sh 100,000 paid to one bank
diffuses through the system (5 Marks)
ii) What limits the amount of total deposits created by commercial banks
(10 Marks)
c) Distinguish between excess reserves and required reserves (3 Marks)
d) Highlight two agency functions carried out by commercial banks (2 Marks)
QUESTION TWO
a) The central bank is responsible for a sound financial system in any country. Briefly
explain how it undertakes this. (10 Marks)
b) Justify the existence of non-banking financial institutions (10 Marks)
2
QUESTION THREE
Write notes on:
a) Liquidity trap
b) Liquidity preference
c) Transaction demand for money
d) Commodity money (20 Marks)
QUESTION FOUR
“The quantative monetary tools utilized in Kenya have had limited impact”.
Discuss (20 Marks)
QUESTION FIVE
a) The Fisher equation of exchange MV = PT though a truism is among the
main basis of modern monetary policies. Explain (10 Marks)
b) Outline five functions of money (10 Marks)

Monetary Theory And Policy Question Paper

More Question Papers

Popular Exams