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Bbam 103: Principles Of Macro-Economics Question Paper

Bbam 103: Principles Of Macro-Economics

Course:Bachelor Of Entrepreneurship Purchasing And Supplies

Institution: Chuka University question papers

Exam Year:2013

CHUKA
UNIVERSITY

UNIVERSITY EXAMINATIONS
FIRST YEAR EXAMINATION FOR THE AWARD OF
DEGREE IN BACHELOR OF ENTREPRENEURSHIP
PURCHASING AND SUPPLIES

BBAM 103: PRINCIPLES OF MACRO-ECONOMICS

STREAM: BBAM (Y1S2) TIME: 2 HOURS

DAY/DATE: TUESDAY 6/8/2013 8.30 A.M. – 10.30 A.M.
INSTRUCTIONS
ANSWER QUESTIO ONE AND ANY OTHER TWO QUESTIONS
DO NOT WRITE ON THE QUESTION PAPER
1. (a) The following information is provided for a certain economy.
C = 100 + 0.1Y – Consumption function
I = 70 – 10r – Investment function
G = 200 – Government expenditure
X = 320 – Exports
T = 30 + 0.2 y – Tax function
M = 20+ 0.4y – Import function
Md = 0.4Y – 0.1 r – Money demand function
Ms= 400 – Money supply
Required:
(i) Explain the meaning of IS and LM curves. [2 marks]
(ii) Derive the IS and LM equations. [6 marks]
(iii) Calculate the equilibrium income and interest rate. [4 marks]
(iv) Determine the equilibrium consumption [3 marks]

(b) Explain the main uses in measuring National income. [6 marks]

(c) Discuss the main determinants of investment. [9 marks]

2. (a) Using a well labeled diagram describe the circular flow of income in an open economy. [10 marks]

(b) Explain the features of prosperity phase of business cycle. [10 marks]

3. (a) Distinguish between the demand pull inflation and cost push inflation, explaining clearly the main causes of each. [13 marks]

(b) Explain the cures of unemployment in Kenya. [7 marks]

4. (a) Distinguish using well labeled diagram between the flexible exchange rate regime and fixed exchange rate regime. [10 marks]

(b) What are the cures of inflation in Kenya. [10 marks]

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Bbam 103: Principles Of Macro-Economics Question Paper

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