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Eco 111: Introduction To Macroeconomics Question Paper

Eco 111: Introduction To Macroeconomics

Course:Bachelor Of Business Management

Institution: Moi University question papers

Exam Year:2015

MOI UNIVERSITY
OFFICE OF DEPUTY VICE CHENCELLOR, ACADEMIC AFFAIRS,
RESEARCH AND EXTENTION
UNIVERSITY EXAMINATIONS
2014/2015 ACADEMIC YEAR

END OF SEMESTER EXAMINATIONS

FOR THE DEGREE OF
BACHELOR OF BUSINESS MANAGEMENT

EXAM CODE: - ECO 111
COURSE TITLE: - INTRODUCTION TO MACROECONOMICS
DATE: - 16TH APRIL, 2015 TIME:-2.00 P.M – 5.00 P.M

INSTRUCTION TO CANDIDATES
? SEE INSIDE.
THIS PAPER CONSISTS OF (3) PRINTED PAGES PLEASE TURN OVER

Instructions to candidates: answer any FOUR questions. All questions carry equal marks.
QUESTION ONE
a) Distinguish between microeconomics and macroeconomics.
i) Distinguish between microeconomics and macroeconomics. ( 5 marks )
ii) Explain briefly the growth and development of macroeconomics and highlight the factors that led to the emergence of new macroeconomics theories.( 10 marks)
b) Describe two sector economy as a circular flow of income, expenditure, factors of production, goods and services. ( 10 marks )

QUESTION TWO
a) Explain methods of measuring national income of an economy and discuss the limitations of these methods ( 15 marks )
b) Distinguish the following terms as used in measurement of national income:
i) Gross national product (GNP) and Gross Domestic Product (GDP) ( 4 marks )
ii) GNP and market prices and GNP at factor cost ( 3 marks )
iii) Personal income (PI) and Personal Disposable Income (PDI) ( 3 marks )

QUESTION THREE
a) Explain and illustrate graphically and Classical Theory of Employment and Output determination ( 10 marks )
b) Discuss briefly the reasons for the collapse of the Classical economic theories of employment and output ( 5 marks)
c) Define unemployment and critically examine and Kazi Kwa vijana and Uwezo fund initiatives as measures to curb unemployment and their ( initiatives) relationship with GDP in Kenya ( 10 marks )

QUESTION FOUR
a) State the assumptions of the Keynesian model of Income determination in two sector economy. Explain the simple model of income determination and show how equilibrium income is determined ( 10 marks )
b) Suppose the structural equations of an economy as given as :
AD=C+1O
C=250+0.8Y
IO=200
Find the equilibrium values of Y and C (8 marks)
c) Suppose in this economy there is an injection in investment of change 1=50, work out the new equilibrium income and the multiplier ( 7 marks )

QUESTION FIVE
a) Discuss the main functions of money in an economy ( 6 marks )
b) Explain reasons why a monetary system emerged from the barter system? ( 5 marks )
c) Explain the motives for the demand for money in an economy ( 6 marks)
d) Discuss the relationship between money supply and economic growth ( 8 marks )

QUESTION SIX
Examine the causes, effects and remedies of unemployment in developing countries ( 25 marks )

Eco 111: Introduction To Macroeconomics Question Paper

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