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Elements Of Macroeconomics Question Paper

Elements Of Macroeconomics 

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2008



AEC 102
ELEMENTS OF MACROECONOMICS
9TH JANUARY 2008
INSTRUCTIONS: Answer question one and two others


QUESTION ONE

a) Explain the difference between the basic theories of international trade. (8marks)

b) Show mathematically how we would obtain equilibrium income for a closed economy, given fixed investments and government expenditures. (8marks)

c) Compare and contrast the tools of monetary and fiscal policies. (10marks)

d) Outline two reasons for deflating data in macroeconomics. (4marks)


QUESTION TWO

a) Using proper diagrams, explain the motives for Keynesian money demand. (9marks)

b) What are the possible effects of increasing income on interest rates. (11marks)


QUESTION THREE

a) Differentiate between multiplier and an accelerator, giving the usefulness of each. (8marks)

b) Explain in detail the following theories of investments. (12marks)
a) Tobin-Q
b) Neoclassical
c) Internal funds theory


QUESTION FOUR

a) What do you understand about money illusion? Explain with examples. (5marks)

b) Compare and contrast Fisher's and the Cambridge equation. (8marks)

c) Outline the sources of both the cost push and demand pull inflation. (7marks)




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