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Econ 323 Advanced Macroeconomics Question Paper

Econ 323 Advanced Macroeconomics

Course:Bachelor Of Science In Economics And Statistics

Institution: Chuka University question papers

Exam Year:2013

CHUKA

UNIVERSITY

UNIVERSITY EXAMINATIONS

THIRD YEAR EXAMINATION FOR THE AWARD OF DEGREE OF
BACHELOR OF SCIENCE (ECONOMICS & STATISTICS)

ECON 323: ADVANCED MACROECONOMICS

STREAMS: B.SC (ECON. & STATS) Y3S2 TIME: 2HOURS

DAY/DATE: FRIDAY 19/4/2013 11.30 A.M. – 1.30 P.M.
INSTRUCTIONS:

- Answer Question One and Any Other Two questions.
- Do not write on the Question paper.

Question One (Compulsory)

1. (a) According to Philip (1958) there is an inverse relationship between inflation
and unemployment. Explain the reasons behind this relationship. [6 marks]

(b) How was this Philip’s curve modified by Friedman? [8 marks]

(c) (i) With aid of well labeled diagram explain what Solow-Swan referred
to as the steady state of an economy. [3 marks]

(ii) Show and explain the effect of an increase in population on the steady state. [3 marks]

(iii) Suppose

Y = K0.5L0.5
n = 0.01, s = 0.2, d = 0.07

Solve for steady state output per worker (y), consumption per worker (c), investment per worker (i), and capital stock per worker (k). [10 marks]

Question Two

2. With aid of diagrams discuss the automatic balance of payment (BOP) adjustment under:-

(a) Fixed exchange rate regime [10 marks]

(b) Flexible exchange rate regime [10 marks]

Question Three

3. (a) Discuss the assumptions of Accelerator theory of investment. [10 marks]

(b) Discuss the contributions of Rational expectation theory. [10 marks]

Question Four

4. (a) Discuss the drawbacks of purchasing power parity (PPP) theory. [10 marks]

(b) Explain the factors that causes equilibrium exchange rate to change.[10 marks]

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Econ 323 Advanced Macroeconomics Question Paper

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