BUSS104  MACROECONOMICS .

UNIVERSITY EXAMINATIONS: 2017/2018
EXAMINATION FOR THE DEGREE OF BACHELOR OF BUSINESS IN
INFORMATION TECHNOLOGY
BUSS104 MACROECONOMICS
FULL TIME/PART TIME/DISTANCE LEARNING
DATE: APRIL, 2018 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One & ANY OTHER TWO questions.

QUESTION ONE
(a).Kenya government has heavily borrowed and therefore has a big public debt. Discuss what
has led to increase in the debt citing the challenges the country faces by increasing debt
10Marks
(b). The economy has been facing many economic challenges. Cite some tools or instruments of
fiscal and monetary policy that can be used to intervene in the economy
10Marks
(c) Outline the major functions of money and explain the various motives of holding money.
(5 Marks)
(d) Explain the forms of trade protection that a country can adopt to correct its trade
(5 Marks)
QUESTION TWO
(a). Citing the various sources of revenue to our country, discuss the principles or cannons of
taxation 10Marks
(b). Inflation is a necessary evil in an economy. Discuss the effects of inflation and cite
measures to correct it 10Marks
QUESTION THREE
(a). Explain the role of international trade protection to developing economies citing the various
forms of protection 10Marks
(b).Assume the following information represents the National income model of an Utopian
economy
Y= C+ I+ G T- Taxes
C= a+b(Y-T) I- Investment
T= d+tY G- Government expenditure
I= IO
G= GO
i. Explain the economic interpretation of the parameters a,b,d and t
ii. Find the equilibrium values of income consumption and taxes
( c) Discuss the three approaches used in measuring National Income of a country and show
why they give the same estimates
10Marks
QUESTION FOUR
a) Distinguish between economic growth and economic development citing the reasons that
have led to slow economic growth of developing countries
10Marks
b) Suggest measures that may be implemented to combat poverty in developing countries.
Citing the likely challenges to be faced
10Marks
QUESTION FIVE
(a) Discuss the main causes of unemployment and suggest possible measures that should be
implemented to contain unemployment problems 10Marks
(b) Public finance management is key to the development of every economy. Discuss the
objectives of public expenditure citing reasons for the increase in public debt.
(10 Marks)

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