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Bcom 103:Principles Of Macroeconomics Question Paper

Bcom 103:Principles Of Macroeconomics

Course:Bachelor Of Commerce

Institution: Chuka University question papers

Exam Year:2010

INSTRUCTIONS:
- Answer Question One and any other Two. - Do not write anything on the question paper.
Question One (Compulsory)
(a) Highlight the major macroeconomic policies that an economy can adopt to control and regulate macroeconomic variables to achieve the macroeconomic goals. [10 marks]
(b) How does Keynesian differ with classical economists as far as the following is concerned. Explain.
(i) Consumption function (ii) Investment function (iii) Speculative money demand [10 marks]
(c) Using a well labeled diagram explain the paradox of thrift. [10 marks]
Question Two
(a) Using well labeled diagrams explain the following types of inflation and give at least 3 causes of each one of them.
(i) Demand pull inflation (ii) Cost push inflation [14 marks]
2
(b) Explain the factors that determine the decision to invest. [6 marks]
Question Three
(a) Discuss the causes of unemployment in Kenya. [10 marks]
(b) The following information for a certain economy is given
C = 20 + 0.5Yd I = 70 – 10r G = 100 T = 10 + 0.2Y X = 60 M = 15 + 0.1Y R = 20%
Required:
(i) Compute the autonomous investment, Government expenditure and Tax multipliers. (ii) Find the equilibrium income [10 marks]
Question Four
(a) Distinguish the following terms:
(i) Comparative advantage and absolute advantage (ii) Involuntary and voluntary unemployment (iii) Trotting and Galloping inflation (iv) Recession and recovery phases of business cycles. [10 marks]
(b) The goals and money markets for an economy are defined by the following equations:
C = 200 + 5 2 Y I = 1900 – 12r MSP = 100 – 10r MT = ½Y MS = 1500
Required:
(i) Device the LM & IS function of the economy. (ii) Calculate the equilibrium income(Y) and interest rate (r) for the economy. [10 marks] --------------------------------------------------------------------------------------------------------

Bcom 103:Principles Of Macroeconomics Question Paper

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