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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:2012

QUESTION ONE (30 MARKS)
a) Explain the following terms as used in economics. ( 10 Marks) (i) Net National Income (ii) Personal Income (iii) Disposable personal income (iv) Effective demand (v) Full employment b) Derive the investment function and explain the investment demand curve. ( 6 Marks) c) Explain the classical quantity theory of money. ( 6 Marks) d) Explain the various types of inflation. ( 8 Marks)
QUESTION TWO – (20 MARKS)
a) You are provided with the following data of the income of a country.
G = 500 C = 40 +0.6Yt I = 210 X = 10 T = 10 +0.2Y M = 50 +0.3Y (i) Write the consumption function in terms of income. ( 3 Marks)
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(ii) Sketch the consumption function and state the multiplier. ( 3 Marks) (iii) Calculate the national income ( 3 Marks) (iv) Given that the full employment G.DP is 700. By how much should the government reduce its expenditure so as to plan for full employment. ( 3 Marks) (v) What should be Government expenditure? ( 2 marks) b) State the functions of money. ( 6 Marks)
QUESTION THREE – (20 MARKS)
a) Using the Keynesian theory, Explain the national income equilibrium. ( 10 Marks) b) State and explain the main functions of the Central bank to the government. ( 10 marks)
QUESTION FIVE – ( 20 MARKS)
a) Explain the aggregate demand curve and state and explain reasons of its shape.
( 10 Marks)
b) Using a numerical example derived the simple national income multiplier. ( 10 Marks)

Hbc2115:Introduction To Macro Economics Question Paper

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