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Introduction To Macro-Economics Question Paper

Introduction To Macro-Economics

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2010

UNIVERSITY EXAMINATIONS: 2009/2010
FIRST YEAR EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
CFU 103: INTRODUCTION TO MACRO-ECONOMICS (Day)
DATE: AUGUST 2010 TIME: 2 HOURS
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
a) In a certain economy the marginal propensity to save is 0.2 and the autonomous consumption
equal 400 billion
(i) Formulate the consumption function (5 Marks)
(ii) What is the relationship between simple multiplier and marginal propensity to consume
(5 Marks)
b) Explain the difference between cost-push and demand pull inflation (5 Marks)
c) What should be the principal macro-economics objective for a developing country such as Kenya
(5 Marks)
d) Briefly describe the quantity theory of money (5 Marks)
(TOTAL: 30 MARKS)
QUESTION TWO
a) Distinguish between a tariff and a quota as applied in international trade (8 Marks)
b) Discuss the argument for and against international trade restrictions or protection (12 Marks)
(TOTAL: 20 MARKS)
2
QUESTION THREE
a) Given the following data in billions of shillings pertaining to an economy, determine net national
and gross national product values
National income 3,387
Indirect business taxes (less subsidies) 366
Depreciation 455
(4 Marks)
b) Explain the various methods used in computing national income (8 Marks)
c) What major practical and Conceptional problems are encountered when estimating national income
(8 Marks)
(TOTAL: 20 MARKS)
QUESTION FOUR
The phrase “Unemployment is a price well worth paying for low inflation, uttered by a recent British
chancellor was regarded by many as under-estimating the heavy cost of unemployment”
a) Write a brief paper to the chancellor setting out
(i) The cost of unemployment (7 Marks)
(ii) Main causes and types of unemployment (7 Marks)
(iii) Discuss how government might seek to reduce high unemployment levels (6 Marks)
(TOTAL: 20 MARKS)
QUESTION FIVE
Write brief notes on the following:
a) The main item in the current account of the balance of payment
b) Keynesian motive regarding demand for money
c) Free floating and fixed exchange rate.
d) Phillip’s curve
(TOTAL: 20 MARKS)

Introduction To Macro-Economics Question Paper

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