DBIT304 MACROECONOMICS.

UNIVERSITY EXAMINATIONS: 2016/2017
EXAMINATION FOR THE DIPLOMA IN BUSINESS INFORMATION
TECHNOLOGY
DBIT 304 MACROECONOMICS
SPECIAL/SUPPLEMENTARY EXAMINATION
DATE: JULY, 2017 TIME: 2 HOURS
INSTRUCTIONS: Answer any THREE questions.

QUESTION ONE
(a) Distinguish between Bilateral trade and multi-lateral trade (2 Marks)
(b)Highlight any 4 advantages of international trade in any economy. (4 Marks)
(b)Define the term balance of payment and outline its contents (4 Marks)
(c ) Most developing countries experiences unfavorable balance of payment. Discuss any five reasons for
this and suggest possible measures for the same. (10 Marks)
(Total: 20 Marks)
QUESTION TWO
(a) Distinguish between cost push inflation and demand pull inflation. (4 Marks)
(b)Distinguish between injections and withdrawals as used in National Income analysis and outline the
items that constitute each. (6 Marks)
(c)A statistic office of a hypothetical country has the following financial figures of a certain year. (Figures
are in billions of shillings)
Billions
Gross Domestic Product 25700
Net factor income from abroad 715
Capital consumption allowance 2309
Indirect business taxes 1790
Social security contribution 1840
Corporate income taxes 755
Undistributed profits 355
Transfer payments 3370
Personal taxes 1890
Required:
(i)Net National Product (N.N.P) (3 Marks)
(ii)National income at factor cost. (N.N.I) (2 Marks)
(iii)Personal Income. (P.I) (3 Marks)
(iv)Disposable Personal Income (D.P.I) (2 Marks)
(Total: 20 Marks)
QUESTION THREE
(a)Distinguish between money and near money (4 Marks)
(b)Outline any 3 functions of commercial banks in an economy. (3 Marks)
(b)Highlight any 3 functions of central bank in an economy (3 Marks)
(c)Discuss any 4 characteristics of good money in an economy (4 Marks)
(d )Discuss any 3 limitations of barter system in an economy (6 Marks)
QUESTION FOUR (Total: 20 Marks)
(a)Distinguish between economic growth and economic development. (2 Marks)
(b)Define the term money substitutes (1 mark)
(c )Distinguish between inflationary gap and a deflationary gap (3 Marks)
(d)Give at least 4 reasons for huge national debts in most less developed countries (4 Marks)
(d )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. (10 Marks)
(Total: 20 Marks)
QUESTION FIVE
(a)Outline any 4 functions of taxation in an economy (4 Marks)
(b)Discuss any 4 principles /cannon of a good tax system. (4 Marks)
(c)Define the term unemployment (2 Marks)
(d)Discuss any 3 types of unemployment in an economy. (6 Marks)
(e)Highlight any 4 reasons for rural-urban migration in an economy (4 Marks)
(Total: 20 Marks)

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