Monetary Theory And Practice Question Paper

Monetary Theory And Practice

Course:Bachelor Of Arts In Economics And History

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
INSTITUTE OF OPEN LEARNING
EXAMINATION FOR THE DEGREE OF BACHELOR OF ARTS
AEC 411: MONETARY THEORY AND PRACTICE
DATE: TUESDAY, 11TH AUGUST 2009 TIME: 2.00 P.M. - 4.00 P.M.

INSTRUCTIONS: Answer Question ONE and any other TWO questions.

Question One

a)
Describe the role of money in economic development of the developing countries.

(20
marks)
b)
What is money? What would you include as the components of money supply? (10 marks)
Question Two
a)
Define monetary policy and explain the main objectives of monetary in a

developing economy.

(17 marks)
b)
Explain the term liquidity trap.

(3 marks)

Question Three
a)
Discuss the main limitations of applying credit control instruments in a developing
economy.

(10
marks)
b)
Describe any five instruments that the central bank uses in regulating money supply

in an economy.

(10 marks)

Question Four
a)
Clearly explain the economic policy implications of a Keynesian and monetary

theories in a depressed economy.

(10 marks)
b)
Explain main functions of commercial banks in a developing economy.
(10 marks)

Question Five
a)
Discuss the consequential economic impact of high and rising rate of interest in

an economy.

(10 marks)
b)
Explain the main role of central bank in a country?s economy.

(10 marks)
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