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Hbc2222:Monetary Theory Question Paper

Hbc2222:Monetary Theory

Course:Bachelor Of Commerce

Institution: Meru University Of Science And Technology question papers

Exam Year:2013

QUESTION ONE (30 MARKS)
(a) Briefly discuss the main functions of money (6 Marks) (b) Define the term monetary policy and the main tools of a monetary policy available to a Central Bank. (10 Marks) (c) Discuss the role of stock exchange in the economy. (6 Marks) (d) exchange. (8 Marks)
QUESTION TWO (20 MARKS)
(a) Outline the distinguishing features of the following money market securities: (i) Repos (ii) Certificate of deposit (iii)Treasury bills (iv) Commercial paper (8 Marks) (b) Differentiate between flat money and full bodies money. (4 Marks) (c) Discuss the measurement of money supply. (8 Marks)
QUESITON THREE (20 MARKS)
(a) What role do non-bank financial institutions play in economic growth and development? (8 Marks) (b) Differentiate between Commercial Bank and non Banked financial institutions. (12 Marks)
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QUESTION FOUR (20 MARKS)
(a) Identify the main instruments used by the central banking authorities to control money supply. (8 Marks) (b) Discuss the limitation of monetary policies in developing countries. (12 Marks)
QUESTION FIVE (20 MARKS)
Consider the following demand for money schedule where income (Y) is in billions of shillings and interest rate is calculated as a percentage: = 0.4 80.
(a) What is the demand for money when the income is Ksh.Trillion ( = 1100) and the interest rate is 5%. (5 Marks) (b) What is the velocity of money? (5 Marks) (c) With the level of income taken as given, how would your answer in a change if the interest rate were: (i) 1% (ii) 10%
Explain: (10 Marks)

Hbc2222:Monetary Theory Question Paper

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