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Econ 120: Introduction To Macroeconomics April 2010 Question Paper

Econ 120: Introduction To Macroeconomics April 2010

Course:Bachelor Of Economics And Mathematics

Institution: Kabarak University question papers

Exam Year:2010

COURSE CODE: ECON 120:
COURSE TITLE: INTRODUCTION TO MACRO
ECONOMICS
STREAM: Y1S2

INSTRUCTIONS:
1. Answer question ONE (1) AND ANY OTHER TWO (2) question
2. Question ONE is COMPULSORY.

QUESTION 1
a) The following information was found in Kenya Economy.
Khs. Million
Consumption Expenditure 328,453
Exports 123,396
Taxes on expenditure 80,136
General government final expenditure 99,426
Imports 142,527
Subsidies 5,668
Value of physical increase in stock 3,012
Investment 100,472
Interest and dividends from abroad 14,582
Property income paid abroad 10,000

i) Calculate national income using expenditure approach. ( 5 marks)
ii) Explain the uses of natural income statistics you have calculated in (i) above. (5 marks)

b) The Kenya economic growth was 2.8% in 2002 in 2002 and 2005 was 5.2% therefore, the
social welfare of the citizens improved. Discuss. (5 marks)

c) Explain the various monetary tools that a country expensing is feature used to correct the
volume of money in the circulation. (5 marks)

d) Outline the various functions of a central bank of a given country. (5 marks)

e) Explain the various advantages of international trade to a country. (5 marks)

QUESTION 2

a) (i) Define the term inflation. (2 marks)
(ii) Explain the causes of cost-push inflation. (5 marks)
(iii) Suggest the measure that would be undertaken to control cost-push inflation.
(5 marks)
b) Explain the following types of unemployment.
(i) Frictional unemployment. (2 marks)
(ii) Structural unemployment. (2 marks)
(iii) Cyclical unemployment. (2 marks)
(iv) Residual unemployment. (2 marks)

QUESTION 3
a) Explain according to Keynes the motives behind the households desire to hold money
balances. (6 marks)
b) Explain the various functions of money in a given economy. (8 marks)
c) Explain the consequences of high rate of unemployment to a country. (6 marks)

QUESTION 4

a) Describe various determinant of money supply. (8 marks)
b) Explain the limitations that a bank face when undertaking a process of credit creation.
(6 marks)
c) Give reasons why it is difficult to compare the natural income of one country with that of
another country. (6 marks)

QUESTION 5
a) Discuss the various causes of debt crisis in developing countries. (8 marks)
b) Explain the objectives of international monetary fund (I.M.F) and describe the different
facilities that are available for countries seeking financial assistance. (12 marks)

Econ 120: Introduction To Macroeconomics April 2010 Question Paper

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