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Buss 322: Money Banking And Finance Question Paper

Buss 322: Money Banking And Finance

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2010

FACULTY : BUSINESS AND MANAGEMENT STUDIES
DEPARTMENT : BUSINESS ADMINISTRATION
TIME : 2 HOURS
INSTRUCTIONS Answer Question ONE and any Other TWO Questions

Question 1
a) If you were to travel to a newly discovered civilization, how could you tell whether or not the people had an economy based on money? What kinds of money do you think might be used in Kenya in the year 2080 (10marks)
b) Discuss the salient features of the branch banking system of banking highlighting its merits and demerits (8marks)
c) Suppose there is a deposit made in favour of Equity Bank of Ksh. 50,000. Show the deposit creation process of four other banks within the Kenyan banking system- highlighting the assumptions and limitations in the credit creation process. (12marks)

Question 2
In the evolution of money, the banker goldsmith contributed a lot to the development of the banking system and central banks.
a) Discuss this statement (10marks)
b) Discuss the relationship between M0, M1 and M2 in the transaction and liquidity approach to money supply in the Kenya Economy (10marks)

Question 3
a) Under certain circumstances, the government may intervene in the foreign exchange to influence the level of exchange rate, using certain methods. Discuss this statement (10marks)
b) In what circumstances does a government devalue a currency? Discuss the economic effects of currency devaluation (10marks)

Question 4
a) In the Sept 2010 Monthly Economic Report (MER), “Due to various economic motives and factors, institutional investors preferred holding Ksh. 1BN worth of Treasury bonds than holding it in cash”. Discuss this statement (10marks)
b) What benefits would a Kenyan company accrue from offering an IPO as opposed to offering corporate bonds? (10marks)

Question 5
a) Describe three motives of holding money according to Keynesian (6marks)
b) The monetarists argue that “holding money burns holes in peoples pocket” and later is inflationary. In light of monetarist theory of money explain (6marks)
c) Briefly explain the tools available to a fiscalists in regulating an economy (8marks)

Buss 322: Money Banking And Finance Question Paper

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