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Eco 216: Economy Of Money And Banking Question Paper

Eco 216: Economy Of Money And Banking

Course:Bachelor Of Arts In Economics

Institution: University Of Kabianga question papers

Exam Year:2016

SCHOOL OF BUSINESS AND ECONOMICS

Department of Accounting, finance and economics.

Regular University Examination for 2015/2016 Academic Year

Examination for the degree of bachelor of Arts in Economics.

ECO 216: ECONOMY OF MONEY AND BANKING.

INSTRUCTIONS:

1. Answer question ONE and any other THREE

2. facilitator rewards originality and innovativeness in reasoning.

Question 1

a) Describe the development of money from barter trade system to the digital trade system. (10 Marks)

b) Give a description of phases that Central Bank of Kenya has gone through in its development up to 1993. (10 Marks)

c) Describe any FOUR challenges that are faced by the current commercial banking industry in Kenya and elsewhere. (4 Marks)

d) Describe the FOUR main theories of term structure of interest rates. (8 Marks)

e) With the assistance of an illustration differentiate between real and nominal interest rates.(2 Marks)

f) Differentiate between deflation and disinflation. (6 Marks)

Question 2

a) Describe a non-bank financial institution. (2 Marks)

b) Give a critical thinking on any 2 types of contractual savings institutions. (8 Marks)

Question 3

a) A failed monetary policy can have significant detrimental effects on an economy and the society that relies on it.Governments and central banks have taken both regulatory and free market approaches to monetary policy. In this respect describe any SIX tools used to manage the supply of money. (6 Marks)

b) Describe the first 4 main measures of money used by most of the central banks in the world.(4 Marks)

Question 4

The most crucial roles of the central bank are to maintain low inflation and a low level of unemployment, although these goals are sometimes in conflict that is according to Philips curve.Give a critical view on this statement. (10 Marks)

Question 5

In respect to the demand for money, discuss the following motives of holding money. (10 Marks)

a) Transaction motive

b) Asset motive

c) Speculative motive

d) Portfolio motive

Eco 216: Economy Of Money And Banking Question Paper

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