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Dfe 101 General Economics Question Paper

Dfe 101 General Economics

Course:Diploma In Business Management

Institution: Kca University question papers

Exam Year:2014

UNIVERSITY EXAMINATIONS: 2013/2014
STAGE III ORDINARY EXAMINATION FOR THE DIPLOMA IN
BUSINESS MANAGEMENT
DFE 101 GENERAL ECONOMICS
DATE: APRIL 2014
TIME: 1 1/2 Hours
INSTRUCTION: Answer any THREE questions
QUESTION ONE: (20 MARKS)
a) Briefly explain why demand curve is downward sloping (2 Marks)
b) Define the law of supply and draw a normal supply curve (3 Marks)
c) Explain a situation where the law of supply is violated (3 Marks)
d) Distinguish between the movement along a supply curve and the shift of supply curve (use
diagrams to illustrate your answer)
(4 Marks)
e) Consider the following demand and supply function of commodity X.
QD= 100-2p
QS = 40 + 4p
(i) Compute the market equilibrium.
(2 Marks)
Suppose the price (p) of commodity X is reduced to 5
(ii) Is demand for commodity X elastic or inelastic? (show your workings and explain
your answer)
(6 Marks)
QUESTION TWO: (20 MARKS)
Government intervention in the labour market is considered to be one of the factors that can lead
to disequilibrium in this market. However the government may impose regulations on the
Minimum wage rates so as to protect the members of the public from exploitation by firms.
1
a) Using well labeled diagrams, show how the government policy on minimum wage rates may
cause disequilibrium in the labour market
(12 Marks)
b) Highlight the four major factors of production and give the relevant rewards on each
(8 Marks)
QUESTION THREE: (20 MARKS)
a) Using relevant examples, discuss the two main theories of international trade explaining
the limitations of each theory.
(10 Marks)
b) Discuss any three forms of restriction or protectionism as used in international trade
(6 Marks)
c) Asses the contribution that international trade has made to our economy
(4 Marks)
QUESTION FOUR: (20 MARKS)
a) What is money? Name the various kinds of money. What constitutes “double coincidence of
wants”?
(6 Marks)
b) Discuss the various functions of money
(4 Marks)
c) The Central Bank has many ways of controlling the supply of money in order to influence
credit conditions in the money Market. Discuss five (5) ways of influencing money supply
(10 Marks)
QUESTION FIVE: (20 MARKS)
a) Define the term unemployment (2 Marks)
b) State and explain any four types of unemployment. (8 Marks)
c) Outline any five effects of inflation to an economy (5 Marks)
d) Suggest any five ways in which inflation in an economy could be arrested in any economy
(5 marks)
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Dfe 101 General Economics Question Paper

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