BUSS104  INTRODUCTION TO MACROECONOMICS.

UNIVERSITY EXAMINATIONS: 2018/2019
EXAMINATION FOR THE DEGREE OF BACHELOR OF BUSINESS
INFORMATION TECHNOLOGY
BUSS104 INTRODUCTION TO MACROECONOMICS
FULL TIME/PART TIME/DISTANCE LEARNING
DATE: DECEMBER, 2018 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One & ANY OTHER TWO questions.

QUESTION ONE
a) Distinguish between the terms “bilateral trade” and “International trade”. (4 Marks)
b) The following table describes the total production of Agricultural and
manufactured goods in two countries.

(i) Which country has a comparative advantage in the production of agricultural
Goods? (1 Mark)
(ii) Which country has comparative advantage in the production of manufactured
goods? (1 Mark)
c) (i) Describe briefly any four functions of money (4 Marks)
(ii) Highlight any three causes of balance of payment disequilibrium (6 Marks)

d) (i). Explain any two types of inflation and indicate clearly the main causes of each (4 Marks)
(ii). Outline any three policies that should adopted by a country experiencing high level of inflation
to bring it down (6 Marks)
e) ‘’Unemployment is one of the serious macro-economic problems facing any country including
kenya’’.
Define the term unemployment clearly stating any three causes of unemployment in the Kenyan
context (4 Marks)
(Total:30 Marks)

QUESTION TWO
a) Using an appropriate diagram explain what is meant by Philips Curve (4 Marks)
b) Outline any four policy measures to curb unemployment in Kenya (4 Marks)
c) The Kenyan Sugar industry has been a long beneficiary of protectionism. Recently COMESA gave
Kenya a maximum of four more years to clear these barriers to trade. Identify and discuss any four
barriers to international trade (12 Marks)
(Total: 20 Marks)

QUESTION THREE:
a) Using a well labelled diagram, explain the meaning of the following two terms as used in
macroeconomics : inflationary gap and deflationary gaps (4 Marks)
b) “A central bank is largely referred by economists as the bank at the apex with monetary authority.’’
Clearly explain the major functions of a central bank. (8 Marks)
c) Explain four main advantages of Kenya being a member of International monetary fund
(8 Marks)
(Total 20 Marks)
QUESTION FOUR
a) Describe any four macroeconomic goals you are familiar with (8 Narks)
b) Discuss four benefits of international trade. (8 Marks)
c) By means of a diagram, explain the circular flow of income and spending in an economy.
(4 Marks)
(Total 20 Marks)
QUESTION FIVE
a) Differentiate between the terms economic growth and economic development
(4 Marks)
b) Discuss any four factors influencing the exchange rates (8 Marks)
c) Describe three determinants of economic growth in an economy (8 Marks)
(Total:20 Marks)

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