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 (Total Marks – 30)
a) Briefly explain the meaning of credit creation and explain the monetary instruments used to control it in an economy. (7 marks) b) State the theory of comparative advantages and explain its assumptions. (8 marks) c) Distinguish between the following paired concepts as used in macroeconomics (i) Gross domestic product (GDP) and gross national product (GNP). (2 marks) (ii) Multiplier and accelerator. (2 marks) (iii) Money markets and capital markets. (2 marks) (iv) Barter trade and free trade. (2 marks) d) Discuss the factors that determine the supply. (7 marks)
QUESTION TWO (Total Marks – 20)
a) The following table illustrates the annual production capacity of Kenya and Uganda in million tones (MT) using a certain amount of labour.
Country Wheat Maize
(MT) (MT)
Kenya 10 25
Uganda 15 10
Required
i) Applying the comparative advantage theory of international trade, what will be the output of each country? Give reasons. (6 marks) ii) Assuming that everything produced is either consumed domestically or exported, what will be Kenya’s total maize exports or imports after the application of the theory of comparative advantages if her maize demand is 30 million tones? Give reasons. (6 marks) b) Explain the principles of a good tax system. (8 marks)
QUESTION THREE (Total Marks – 20)
a) Discuss the causes of inflation and explain the fiscal anti-inflationary measures that can be adopted by a country to control it. (12 marks) b) Discuss the role played by commercial banks in economic development of developing countries such as Kenya. (8 marks)
QUESTION FOUR (Total Marks – 20)
a) Distinguish between consumption and consumption function and discuss the factors that influence the level of consumption function in country. (10 marks) b) Discuss the uses of national income statistics and explain the problems encountered in its estimations. (10 marks)
QUESTION FIVE (Total Marks – 20)
a) Explain the criticisms leveled against the International Monetary Fund (IMF). (7 marks) b) Define business cycle and with the aid of a diagram, explain its phases. (7 marks) c) Giving their components, explain the terms “injections” and “withdrawals” as used in the simple Keynesian income-expenditure model. (6 marks)
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