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Econ 325: Economic Policy Analysis Y4s2 Question Paper

Econ 325: Economic Policy Analysis Y4s2

Course:Bachelor Of Science In Economics And Mathematics

Institution: Kabarak University question papers

Exam Year:2009

KABARAK UNIVERSITY
UNIVERSITY EXAMINATIONS
2009/2010 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF SCIENCE IN
ECONOMICS AND MATHEMATICS
COURSE CODE: ECON 325
COURSE TITLE: ECONOMIC POLICY ANALYSIS
STREAM: Y4S2

Instructions
1. Question ONE is COMPULSORY
2. Attempt any other THREE (3) Questions
3. Question ONE caries 30 marks while the other questions carry 20 marks each
4. Concise answers provide competitive advantage to the candidate
QUESTION ONE COMPULSORY (30 Marks)
a) Define the following concepts:
(i) Policy formulation (1mk)
(ii) Economic efficiency (1mk)
(iii) Market failure (1mk)
(iv) Information asymmetry (1mk)
(v) Policy implementation (1mk)
b) Distinguish between the following paired concepts:
(i) Pareto efficiency and allocative efficiency (3mks)
(ii) Policy instruments and target variables (3mks)
c) Explain the criteria for assessing policy instrument (6mks)
d) Most developing countries have sound policy prescriptions to the many problems that
bedevil them yet they never seem to overcome these problems. What explains this
situation? (8mks)
e) Why would you consider unemployment as a macroeconomic problem? What policy
actions would you recommend to solve the unemployment problem? (5mks)
QUESTION TWO
Assume that Amalepia, a hypothetical developing country in Africa, is pursuing an
inward-looking strategy, with extensive controls on prices, wages, interest rates, imports,
capital movements and extensive state participation in the productive system. Further
assume that Amalepia has serious balance of payments and inflationary difficulties,
declining per capita incomes with falling savings and investment levels.
Required
Discuss the range of policies that you would prescribe to improve the economic
performance of this hypothetical country. (20mks)Page 3 of Page 3
QUESTION THREE
A recent report in the Kenyan press indicated that Kenya is among the 35 countries in the
world that are most severely hit by famine. Assuming that the said report is correct, what
factors do you think could have contributed to this situation? What policies do you
recommend to put Kenya back to track to being not only self-sufficient in food
production but also becoming a net exporter? (20mks)
QUESTION FOUR
a) Briefly examine the concept of Foreign Direct Investment (FDI) within the following
contexts
(i) Home country policies that promote outward FDI (5mks)
(ii) Home country policies that discourage outward FDI (5mks)
(iii)Host country policies that encourage inward FDI (5mks)
(iv)Host country policies that discourage inward FDI (5mks)
QUESTION FIVE
a) With reference to Kenya discuss the role of information in economic development.
Indicate the challenges faced in the implementation of policies relating to
information. (10mks)
b) Discuss the agricultural and industrial policies that have been pursued by the
government of Kenya in the post-election independence era. (10mks)

Econ 325: Economic Policy Analysis Y4s2 Question Paper

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