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Econ 121:Principles Of Macroeconomics Question Paper

Econ 121:Principles Of Macroeconomics 

Course:Principles Of Macroeconomics

Institution: Egerton University question papers

Exam Year:2013



1)Given the following information:
Indirect business taxes (170)
Capital consumption allowance (200)
Business transfer payment (10)
Net national product (2545)
Find:
a)Gross national product
b)National income

2)Given the following National income model
Y=C+I+G+X-M
C=100+0.8Yd Yd=disposable income
T=50+0.2Y
G=150 I=80 X=70
M=200+0.04Y

a)Find the equilibrium income
b)Equilibrium level of imports
c)Government expenditure multiplier
d)If exports increase by 20%, what will happen to equilibrium taxes?
e)What is government budget position at equilibrium?
f)What is the foreign trade position at equilibrium?

3)Graphically show how you can derive the IS curve.
4)Graphically clearly show how an increase in autonomous saving will affect the IS curve.
5)Given the following commodity and money market models:

Y=C+I DMTP=15+2Y
C=20+1/2Y DMS=25-10r
I=40-10r MS=80
Ms=money supply
DMTP and DMS=Demand for Money
a)Derive the IS and LM functions.
b)In one sentence what does IS curve and LM function represent.
c)Find equilibrium income and market rate of interest.
d)Find the savings function.




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