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Buss 115: Macro Economics Question Paper

Buss 115: Macro Economics

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2011

KENYA METHODIST UNIVERSITY
END OF 3''RD ''TRIMESTER 2011 EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : BUSINESS ADMINISTRATION
UNIT CODE : BUSS 115
UNIT TITLE : MACROECONOMICS

TIME: 2 HOURS
Instructions: Answer Question ONE and Any Other TWO Questions
Question One (30 Marks)
Highlight the difference between Microeconomics and Macroeconomics.
(8 Marks)
Use quantity theory to explain why increase in money supply may result to increase in output prices or both.
(6 Marks)
Distinguish between the following terms:
Savings and investment
Transaction and precautionary motives for holding money.
(4 Marks)
Inflationary gap and deflationary gap.
(4 Marks)
Outline the main distinction between flexible exchange rate, fixed exchange
rate and managed floats. (6 Marks)
Question Two
Explain the various tools/instruments and their effectiveness that Kenya monetary authority uses to control money supply in the economy.
(10 Marks)
Discuss the policy and natural causes of structural unemployment and outline its solution.
(10 Marks)
Question Three
Explain the main causes of Kenya’s balance of payment disequilibrium and highlight appropriate policy measures that can be adopted to alleviate this problem.
(10 Marks)

Discuss the importance of international trade.
(10 Marks)
Question Four
Explain why a country may experience a significance rise in unemployment.
(10 Marks)

Suggest economic policies that my be used to reduce persistence unemployment.
(10 Marks)
Question Five
Evaluate the argument for and against protectionism.
(12 Marks)
Distinguish between;
Absolute and comparative advantage
Tariff and quotas
(8 Marks)

Buss 115: Macro Economics Question Paper

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