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Hbc2115:Introduction To Macro Economics Question Paper

Hbc2115:Introduction To Macro Economics

Course:Bachelor Of Commerce

Institution: Meru University Of Science And Technology question papers

Exam Year:2010

QUESTION ONE – (30 MARKS)
(a) Differentiate between macroeconomics and microeconomics. (2 Marks) (b) State the determinants of national income. (4 Marks) (c) Explain the difference between: (i) Gross Domestic Product and Gross National Product (ii) Gross National Product and Net National Product (iii) Disposable Personal Income and Consumption Expenditure. (6 Marks) (d) Briefly explain the functions of money. (8 Marks) (e) Differentiate between terms of trade and balance of payment (4 Marks) (f) State the functions of Public Finance. (6 Marks)
QUESTION TWO – (20 MARKS)
(a) Discuss the methods of computing the National income. (6 Marks) (b) Explain the investment function. (6 Marks) (c) Using the Keynasian model of National income discuss the macro-economic equilibrium. (8 Marks)
QUESTION THREE – (20 MARKS)
(a) Explain two reasons why a government would want to fix the exchange rate. (8 Marks) (b) A country would want to protect itself against foreign trade; explain some of the considerations for this. (12 Marks)
QUESTION FOUR – (20 MARKS)
(a) Assuming that the information represents the National Income of Kenyan Economy. Y = C + G + I C = a + b (Y – T) T = d + tY I = I0 G = G0 T = Taxes I = Investment G = Government Expenditure
Explain to parameters a, b, d, t. (4 Marks)
(b) Explain the tools used by the Central Bank to control money supply. (10 Marks) (c) Explain the reasons for holding money instead of investing it. (6 Marks)
QUESTION FIVE – (20 MARKS)
(a) The following data relates to the National Income parameters of Kenya in Billions of Shillings. C = 56 + 0.8Yd G = 800 I = 400 T = 20 + 0.1 Y X = 20 M = 80 + 0.2Y Required: Calculate; (i) The equilibrium consumption in terms of National income (ii) The marginal propensity to save (iii) The equilibrium level of National Income (10 Marks) (b) Explain the causes of disequilibrium in the balance of payment of a country. (10 Marks)

Hbc2115:Introduction To Macro Economics Question Paper

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