Macroeconomics Theory 1 Cat 1 Question Paper

Macroeconomics Theory 1 Cat 1

Course:Bachelor Of Economics

Institution: Kenyatta University question papers

Exam Year:2012

KENYATTA UNIVERSITY
DEPARTMENT OF ECONOMICS THEORY
EET 101:MACROECONOMICS THEORY CAT 1 2012
TIME: 1 HOUR 40 MIN
__________________________________________________________________________________________
ANSWER ALL THE QUESTIONS. (ALL QUESTIONS CARRY EQUAL MARKS.)

1.a) Describe the traditional role of the Central Bank and thereafter consider its role in a changing and liberalized economy.

b)Describe the means which are available to the central bank for regulating the demand for, and the supply of money and credit.

2.How can the supply of money in a given economy be increased? What purpose can such an increase serve? What are the probable effects of such an increase on the economy’s level of income and its prevailing rate of interest?

3.What is money? Why is money considered a “dynamic force” in modern economies?

4.The Quantity Theory of money states that MV = PT. While explaining this statement indicate the extent to which it represents the practical situation.

5.Discuss the factors that hinder the effectiveness of monetary policy in less developed countries.

6.“Unemployment is one of the major economic problems facing most developing countries”. Explain the major causes and suggest some possible economic policies that these countries could adopt and implement in order to reduce it.

7.Write short notes on the following:
a)Monetary policy

b)Legal tender

c)Saving function

d)Index number of prices

8 a)Define the term rural-urban migration.

b)Explain the consequences of a high rate of rural – urban migration and give specific measures which could be given to contain the phenomena.

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