MAASAI MARA UNIVERSITY
REGULAR UNIVERSITY EXAMINATIONS
2015/2016 ACADEMIC YEAR
SECOND YEAR SECONDSEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
BACHELOR OF ARTS IN ECONOMICS
COURSE CODE: ECO 216
COURSE TITLE: ECONOMICS OF MONEY AND BANKING
DATE: 3RD MAY, 2016 TIME: 11.00AM-1.00PM
INSTRUCTIONS TO CANDIDATES
1. Answer Question ONE and any other THREEquestions
This paper consists of 3 printed pages. Please turn over.
Question One
a) What is inflation (2mks)
b) Outline the economic effects of high inflation level (8mks)
c) Explain any three types of inflation according to cause and indicate clearly what the main causes of each are. (9mks)
d) Explain specific policies to be adopted by a country experiencing high levels of inflation in order to bring it down. (6mks)
Question Two
a) Using appropriate examples, explain the economic roles of the Central Bank in Kenya. (6mks)
b) Discuss the three main theories of money (9mks)
Question Three
a) What is Monetary Policy (2mks)
b) Explain the main objectives of Monetary Policy in an economy (8mks)
c) With appropriate examples, explain five main tools of the monetary policy used by the central bank in stabilizing the economy. (5mks)
Question Four
a) Define the term money (2mks)
b) What are the major functions of money in an economy? (5mks)
c) Discuss the roles played by Banks in economic development.(8mks)
Question Five
a) Discuss the importance of Non-Bank financial intermediaries.(8mks)
b) Explain the fundamental qualities of a commodity to be used as money and why? (7mks)
