Inflationary gap is the excess of aggregate demand over and above its level
required to maintain full employment equilibrium in the economy.(with diagram)
During inflation, both CRR and SLR are raised. This reduces credit creation capacity
of commercial banks. As a result, aggregate demand reduces as required to correct
inflationary gap.
marlinbito answered the question on May 12, 2018 at 13:13
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Which transactions determine the ‘balance of trade’? When is balance of trade in surplus?
(Solved)
Which transactions determine the ‘balance of trade’? When is balance of trade in surplus?
Date posted:
May 12, 2018
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Answers (1)
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Explain how ‘non-monetary exchanges’ are a limitation in taking GDP as an index of welfare.
(Solved)
Explain how ‘non-monetary exchanges’ are a limitation in taking GDP as an index of welfare.
Date posted:
May 12, 2018
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Answers (1)
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State the Say’s Law of markets.
(Solved)
State the Say’s Law of markets.
Date posted:
May 12, 2018
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Answers (1)
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Briefly explain SIX characteristics of money
(Solved)
Briefly explain SIX characteristics of money.
Date posted:
May 11, 2018
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Answers (1)
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Explain FOUR factors affecting the size of a National Income.
(Solved)
Explain FOUR factors affecting the size of a National Income.
Date posted:
May 10, 2018
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Answers (1)
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Explain five factors which determine the productivity of labour
(Solved)
Explain five factors which determine the productivity of labour.
Date posted:
May 9, 2018
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Answers (1)
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Outline the assumptions of Economic Order Quantity (EOQ)
(Solved)
Outline the assumptions of Economic Order Quantity (EOQ).
Date posted:
May 8, 2018
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Answers (1)
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Explain the reasons why commercial banks prefer to lend Short-term loans
(Solved)
Explain the reasons why commercial banks prefer to lend Short-term loans.
Date posted:
May 6, 2018
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Answers (1)
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Discuss Kenya's level of attainment of sustainable development goals
(Solved)
Discuss Kenya's level of attainment of sustainable development goals.
Date posted:
May 1, 2018
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Answers (1)
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State the assumptions of Ricardo’s theory of comparative advantage
(Solved)
Explain three types of production cost.
Date posted:
April 26, 2018
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Answers (1)
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Discuss the effects of Government borrowing on the Economy and give a possible solution to the problems
(Solved)
Discuss the effects of Government borrowing on the Economy and give a possible solution to the problems.
Date posted:
April 22, 2018
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Answers (1)
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What are the problems facing the Kenya’s economy?
(Solved)
What are the problems facing the Kenya’s economy?
Date posted:
April 21, 2018
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Answers (1)
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Explain briefly the various stages of economic development according to W.W. Rostov
(Solved)
Explain briefly the various stages of economic development according to W.W. Rostov.
Date posted:
April 21, 2018
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Answers (1)
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Critically explain Malthusian theory of population
(Solved)
Critically explain Malthusian theory of population.
Date posted:
April 16, 2018
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Answers (1)
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What are the reasons for studying economics of education?
(Solved)
What are the reasons for studying economics of education?
Date posted:
April 4, 2018
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Answers (1)
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a)Explain briefly the application of calculus to economic models, especially in the context of maximizing contribution and minimizing costs.
b)Company A...
(Solved)
a)Explain briefly the application of calculus to economic models, especially in the context of maximizing contribution and minimizing costs.
b)company A sells all its output to company B for Sh. 200 per unit. The cost of the sales per week in company A are given by the function C = 2q2 + 40q + 80 where q is the value of weekly sales. Company B uses the output of company A to manufacture a product whose demand is dependent on the sale price. The revenue per week of company B is given by the function:
R = 1000q – 16q2 and the cost per week of company B excluding cost of the products bought from company A are given by the function.
C = 2q2 + 80q + 400
Company A can restrict the weekly supply of its product to company B, but cannot raise the unit price above Sh. 200. The two companies are considering whether to merge together into a single company.
Required:
i)At what weekly sales would company A maximize its profits? What would be the profit or loss of company B if company A were able to supply a profit maximizing quantity of its product each week?
ii)At what level of weekly sales would company B maximize its profits?
iii)If the two companies merge into one, what would be the profit maximizing output per week and what would be the weekly profit?
Date posted:
April 2, 2018
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Answers (1)
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Describe the limitations of the CVP (Cost, Volume and Profit) Analysis
(Solved)
Describe the limitations of the CVP (Cost, Volume and Profit) Analysis.
Date posted:
April 1, 2018
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Answers (1)
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Your firm is the auditor of Trent Textiles Ltd, and you are planning your
audit work on the stock-take, which will be carried out at...
(Solved)
Your firm is the auditor of Trent Textiles Ltd, and you are planning your
audit work on the stock-take, which will be carried out at the firm‟s year-
end of 31 May 19X3.
Trent Textiles manufactures knitted garments, including pullovers. The
production process comprises:
(a) Knitting the individual components (e.g body and arms);
(b) Sewing the components together to form the finished garment;
(c) Cleaning, finishing, pressing and folding the garments;
(d) Packing the garments, ready for dispatch to the customer.
Trent Textiles does not have a perpetual inventory system, so the value of
the stock in the accounts is found from the stock-take at the year-end. For
management purposes, Trent Textiles carries out a full stock-take every
three months.
Your permanent file of the company confirms that it has a single factory
and no internal audit department.
You have been asked by the manager in charge of the audit to suggest the
work you will perform at the stages listed below.
Required:
(a) State the work you will carry out prior to the commencement of the
stock-take.
(b) State the procedures you will check during the stock-take to ensure
the company‟s staff have accurately recorded the stock.
(c) State the work you will carry out and the matters you will record at the
stock-take
Date posted:
March 30, 2018
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Answers (1)
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List six effects of price decontrol?
(Solved)
List six effects of price decontrol?
Date posted:
March 23, 2018
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Answers (1)
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Compare and contrast ordinal and cardinal utility theory
(Solved)
Compare and contrast ordinal and cardinal utility theory.
Date posted:
March 21, 2018
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Answers (1)