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Economics 2009 Question Paper

Economics 2009

Course:Diploma In Supplies Management (Supplies Management)

Exam Year:2009

DIPLOMA IN SUPPLIES MANAGEMENT PART I
DIPLOMA IN BANKING PART I
INSTRUCTIONS TO CANDIDATES
Answer any FIVE of the SEVEN questions.
All questions carry equal marks.
This paper consists of 3 printed pages.
Candidates should check the question paper to ascertain that all the pages are printed as indicated and no questions are missing.
1.(a) One of the concerns of economics as a discipline is the creation of wealth in an economy. Highlight the factors that may limit the extent of wealth creation in a country.(10 marks)
(b) There are certain problems that are associated with high levels of unemployment in a country. Explain such problems.(10 marks)

2.(a) Fisher's quantity theory of money is widely described by the equation MV=PT Describe each component of the equation.(8 marks)
(b) Explain the factors that would motivate an entrepreneur to establish a firm.(12 marks)
3.(a) Highlight the conditionalities that are usually imposed by the International Monetary Fund (IMF) when extending credit to the Less Developed Countries.(10 marks)
(b) There is an increasing tendency to substitute labour with capital in the production process. Explain the reasons that may account for this trend.(10 marks)

4.(a) With the aid of a diagram, explain how a firm operating under perfect competition would determine the price of its products in the long-run.(10 marks)
(b) Explain why employer's associations are not well developed in the Less Developed Countries.(10 marks)

5.(a) The table below shows the trend in price in relation to the quantity demanded and quantity supplied of a certain consumer product.
Price of the Product (Ksh)--------Quantity Demanded (Kg)--------Quantity Supplied (Kg)
180-----------------------------------------540------------------------------------610
190--------------------------------------------600--------------------------------600
220--------------------------------------------620--------------------------------580
250--------------------------------------------640---------------------------------550
300--------------------------------------------660---------------------------------540
Explain the likely consequences of the trend shown above.(10 marks)
(b) A government may use subsidies in its fiscal policy to influence the performance of the economy in the short-run. Explain how such subsidies would influence performance of the economy.(10 marks)

6.(a) There are certain factors that tend to frustrate the efforts of the Less Developed Countries that rely on the agricultural sector as the basis for economic development. Highlight such factors.(10 marks)
(b) Describe the methods that a country may use to implement a protectionist policy in international trade.(10 marks)

7.(a) One of the problems that a country may encounter when determining national income using the output approach is double-counting. Highlight the ways in which this problem may be overcome.(10 marks)
(b) Kenyans have in recent past participated actively in the purchase of shares issued by companies through the initial public offer (IPO). Explain the factors that may account for such active participation by the nationals.(10 marks)

Economics 2009 Question Paper

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