DBIT 304 MACROECONOMICS.

UNIVERSITY EXAMINATIONS: 2017/2018
EXAMINATION FOR THE DIPLOMA IN BUSINESS INFORMATION
TECHNOLOGY
DBIT 304: MACROECONOMICS
DATE: DECEMBER, 2017 TIME: 1 ½ HOURS
INSTRUCTIONS: Answer ANY THREE questions.

QUESTION ONE
(a) Distinguish between Bilateral trade and multi-lateral trade (2 Marks)
(b) Highlight three disadvantages of international trade in any economy. (3 Marks)
(c) Distinguish between money and near money (3 Marks)
(d) Explain three types of unemployment in an economy (6 Marks)
(e) Discuss three functions of central bank in an economy (6 Marks)
QUESTION TWO
(a) Distinguish between monetary inflation and demand pull inflation. (2 Marks)
(b) Explain four uses of National income statistics in an economy (4 Marks)
(c) Distinguish between injections and withdrawals as used in National Income analysis and
outline the items that constitute each. (4 Marks)

(d) Consider a hypothetical (imagined) economy-XYZ with National Income parameters as
given bellow
Component/ item Sh. ”billions”
GDP 120000
Exports 1500
Imports 1851
Depreciation 1555
Subsidies 458
Indirect taxes 1091
Transfer payments 7255
undistributed profit 479
Social security contributions 523
Corporation/ business taxes 1271
Personal income taxes 455
Calculate the following;
(i) Gross National Product (2 Marks)
(ii) Net National Product (2 Marks)
(iii) Net National Income (2 Marks)
(iv) Personal Income (2 Marks)
(v) Disposable Personal Income (2 Marks)
QUESTION THREE
(a) Discuss the role of commercial banks in economic growth and development. (5 Marks)
(b) Distinguish between money and near money (2 Marks)
(c) Discuss three characteristics of good money in an economy (3 Marks)
(c) Explain three principles of a good tax system (6 Marks)
(d) Distinguish between the terms “Terms of trade index” and “balance of payment” (4 Marks)

QUESTION FOUR
(a) Explain three reasons for a country to have foreign exchange reserves (3 Marks)
(b) Discuss three forms of restrictions as used in international trade (6 Marks)
(c) Distinguish between inflationary and a deflationary gaps (3 Marks)
(d) Explain four reasons for huge national debts in Kenya (4 Marks)
(e) Explain four functions of the government in an economy (4 Marks)
QUESTION FIVE
(a) Explain three monetary tools used by the central bank in the control of supply of money in an
economy (6 Marks)
(b) Explain the three motives for demand for money as demonstrated by Keynesian theory
(6 Marks)
(c) Kenya as a developing country is looking forward to achieve the vision 2030. Discuss the
factors that may hinder Kenya not to achieve this vision by the year 2030 and suggest possible
measures that the government need to put into place so that this vision can be achievable.
(8 Marks)

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