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Aec 411: Monetary Theory And Policy Question Paper

Aec 411: Monetary Theory And Policy 

Course: Bachelor Of Arts In Economics

Institution: Kenyatta University question papers

Exam Year:2003



Answer any 3 questions.

1. a) What effects will a combination of expansionary fiscal and contractionary monetary
policies have on a country's exchange rate? (14 marks)

b) Discuss any three instruments of the monetary policy.(9marks)


2. a) Differentiate between the short and the long-run Phillips curve. What are their
monetary policy implications. (10 marks)

b) How can a monetary policy change be affected to correct an inflationary gap?
Illustrate. (131/2 marks)


3. a) What are the major theoretical similarities and differences between classical and
Keynesian economics an monetary policy?

b) Explain the following economics (14 1/2 marks)

(i) Monetary theory (ii) Currency Depreciation

(iii))Currency Sterilization


4. a) What reasons do you think have been behind the poor performance of the monetary
policy in most developing economies? (12 marks)

b) Discuss the Keynesian and classical theories of interest rate determination and
outline their implications for monetary policy. (11 1/3 marks)

5. a) Explain the following terms:

(i) Monetizing Government Deficit. (5 marks)

(ii) accommodating monetary policy. (5 marks)




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