MAASAI MARA UNIVERSITY
REGULAR UNIVERSITY EXAMINATIONS
2016/2017 ACADEMIC YEAR
FOURTH YEAR SECOND SEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
BACHELOR OF BUSINESS MANAGEMENT/BACHELOR OF EDUCATION
COURSE CODE: BBM 417
COURSE TITLE: INTERNATIONAL ECONOMICS
DATE: 15TH MAY 2017 TIME: 11:00 – 13:00HRS
INSTRUCTIONS TO CANDIDATES
Answer Question ONE and any other THREE questions
This paper consists of THREE printed pages. Please turn over.
QUESTION ONE
a) Explain the significance of the study of International Economics (6marks)
b) Discuss why most less developed countries experience unfavourable trade with the rest of the world (7marks)
c) Explain the policies that were put in place during Mercantilism to ensure acquisition of specie (6marks)
d) Discuss the traditional arguments for Protectionism (6marks)
QUESTION TWO
A) Explain the factors that led to the emergence of Free Trade (8marks)
B) Given the following:
NOTE: Numbers in the table denote labour required to produce ONE unit of the product.
(i) Explain what country A and B should specialize in its production (4marks)
(ii) Suppose the output of Coffee is reduced by 1 unit in country A and output of Tea in country B fall by 1 unit. How would this affect the world’s total output? (4marks)
QUESTION TWO
Explain the following theories of international trade:
(i) Comparative Advantage by David Ricardo (5marks)
(ii) Imitation Lags Theory of Trade (5marks)
(iii) The Product cycle Theory (5marks)
QUESTION THREE
a) Discuss the role of taste in shaping production and international trade (8marks)
b) The problem of developing counties in international trade is the nature of their exports. Discuss. (7marks)
QUESTION FOUR
a) Explain how exchange rate affect the flow of capital in the international market (8marks)
b) Explain the beliefs and practices of the mercantilist doctrine (7marks)
QUESTION FIVE
a) Given the following:
NOTE: Numbers in the table denote labour required to produce ONE unit of the product.
Can the two counties engage in beneficial trade? Prove your answer. (7marks)
b) Explain how adoption of a common currency will promote trade among the members of the East African Cooperation (8marks)
