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Econ 121:Principles Of Macroeconomics Question Paper

Econ 121:Principles Of Macroeconomics

Course:Principles Of Macroeconomics

Institution: Egerton University question papers

Exam Year:2015

1)Briefly explain how National Income can be measured using:
a)The income method
b)The expenditure method

2)Explain the importance of National Income Account Statistics.

3)Given the following information:
Indirect taxes (650)
Subsidies (320)
Capital consumption allowance (350)
Direct taxes (1250)
Transfer payments (120)
Net national product at factor cost (6880)

Find:
i)Gross National product at market prices.
ii)Disposable Income
iii)Net National product at market prices.

4)An economy is characterised by the following information;
C=160+0.8Yd
Yd=disposable income
T=50+0.2Y
M=20+0.04Y
G=50 I=20 X=30

a)Find the savings function and interpret it.
b)Find equilibrium level of income.
c)Find equilibrium taxes and imports.
d)Find the value of government expenditure multiplier and interpret it.
e)What is government budget position at equilibrium.

5)Using a diagram show and explain the paradox of thrift.
6)Explain briefly the functions of money in economic development.
7)Given the following information:

S=-11+0.16Y MDTP=50+2Y
T=5+0.2Y MDS=80-10r
I=5+5.5r MS=380
G=7 MDTP=Money demand for transactions and precautionary purposes.
MDS=Liquidity preference
MS=Money supply

i)Derive the IS and LM.
ii)Interpret the IS and LM functions derived.
iii)What factors can cause a shift in the IS curve and how.
iv)What factors can cause a shift in LM curve and how.

8)How is inflation measured?
9)Explain the causes of:
a)Demand pull inflation.
b)Cost push inflation.

10)How can the following types of inflation be controlled?
a)Demand pull inflation.
b)Cost push inflation.

Econ 121:Principles Of Macroeconomics Question Paper

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