Hps2208:Mechandise Question Paper
Hps2208:Mechandise
Course:Bachelor Of Supplies Management
Institution: Meru University Of Science And Technology question papers
Exam Year:2013
QUESTION ONE (30 MARKS)
a) Given the savings function ?? = -10 + 0.2?? and investment ?? = 50. i. Find the equilibrium level of income. (6 Marks) ii. Find the level of consumption. (4 Marks) iii. If investment increases by 10, what will be the new levels of income and consumption? (4 Marks) b) The following data are given for an economy ?? = 400 + 0.75???? ?? = 1400 + 30?? ?? = 1000 ?? = 800 + 0.1?? ???? = 0.15?? - 10?? ???? = 850 i. Find out the equilibrium income and interest rate. (8 Marks) ii. Suppose the government increases its expenditure on education and health services by 650, what would be its effect on equilibrium income and rate of interest? (4 Marks) c) Distinguish between crowding out effect and demonstration effect. (4 Marks)
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QUESTION TWO (20 MARKS)
a) Given the following information for an hypothetical economy Consumption, ?? = 2400 + 0.8???? Investment ?? = 1200 Government exp ?? = 2200 Exports ?? = 1800 Imports ?? = 1200 + 0.2 ?? Tax ?? = 700 + 0.2 ?? Transfer payment ?? = 800 i. Determine equilibrium level of national income. (4 Marks) ii. Determine consumption level at equilibrium income. (2 Marks) iii. Determine the balance of trade. (2 Marks) iv. Calculate: (i) Investment multiplier (1 Mark) (ii) Transfer payment multiplier (1 Mark) (iii)Imports multiplier (1 Mark) (iv) Exports multiplier (1 Mark) (v) Tax multiplier (1 Mark) b) Explain the types of unemployment. (5 Marks)
QUESTION THREE (20 MARKS)
a) Distinguish between Adan Smith’s view of the economy and Keynesian view of the economy. (8 Marks) b) Distinguish between the supply side economics and the neo-classical economics. (7 Marks) c) Discuss the ranges of the economy. (6 Marks)
QUESTION FOUR (20 MARKS)
a) Discuss the macroeconomic policy tools. (10 Marks) b) Explain the causes for ineffeciencies of fiscal and monetary policies in solving macroeconomic problems. (6 Marks) c) Distinguish between rational expectations and adaptive expectations. (4 Marks)
QUESTION FIVE (20 MARKS)
a) Discuss the liquidity preference theory of demand for money. (4 Marks) b) With the aid of a diagram explain the derivation of LM and IS curve. (8 Marks) c) Discuss the theories of consumption. (8 Marks)
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