December 2023

1a

Economic growth, economic development and economic planning

(i) Explain the term “economic planning”.

(ii) Argue FOUR cases in favour of government investment in the process of economic planning.

1b

Money and banking

Examine FIVE roles of the central bank in an economy.

1c

Demand, supply and determination of equilibrium

Describe FOUR characteristics of a perfectly competitive market.

1d

Economic growth, economic development and economic planning

Explain FIVE causes of rising foreign debt in least developed countries.

2a

Money and banking

Highlight SIX causes of deficits in the balance of payment.

2b

Demand, supply and determination of equilibrium

With the aid of a well labelled diagram, illustrate the substitution and income effect of:

(i) Inferior good.

(ii) Normal good.

2c

Demand, supply and determination of equilibrium

State FOUR product pricing strategies.

3a

Economic growth, economic development and economic planning

Discuss FOUR sets of economic reforms that the Bretton Woods financial institution may impose on a country.

3b

Economic growth, economic development and economic planning

Describe SIX roles of industry in economic development of the least developed countries.

3c

Inflation and unemployment

Outline FIVE reasons why urban unemployment is a major policy issue in developing countries.

4a

Demand, supply and determination of equilibrium

(i) Explain the term “optimal size of the firm”.

(ii) List SIX factors that determine the cost behaviour of a firm.

4b

Demand, supply and determination of equilibrium

(i) Differentiate between an “Engel curve” and “Income consumption curve” as used in consumer behaviour analysis.

(ii) Using a well labelled diagram, derive the Engel Curve for a normal good using the indifference curve analysis.

5a

Demand, supply and determination of equilibrium

Explain FOUR assumptions of the law of demand.

5b

Demand, supply and determination of equilibrium

The demand function for a certain commodity is given as follows:

\(Q = 110 – 3P + {\large \frac{75}{2P^2}}\)

Where;

Q = Quantity demanded
P = Price

Required:

(i) Point price elasticity of demand when the price is Sh.15.

(ii) Interpret your results in (b) (i) above.

5c

Economic growth, economic development and economic planning

Outline SIX demerits of delocalisation of industries.

6a

Introduction to economics

Describe THREE steps involved in the scientific method of studying economics.

6b

Demand, supply and determination of equilibrium

Explain the term “dead weight loss” as used in economics.

6c

Demand, supply and determination of equilibrium

With the aid of a diagram, explain why the marginal revenue curve lies below the average revenue curve under monopoly.

6d

Demand, supply and determination of equilibrium

Summarise SIX factors that may determine wages and salaries in an economy.

7a

Demand, supply and determination of equilibrium

State FOUR factors that could influence the price of land as a factor of production.

7b

Demand, supply and determination of equilibrium

A consumer has a fixed income of Sh.12,000 which must be spent entirely on bread and alcohol. The price per unit of bread is Sh.50 while the price per unit of alcohol is Sh.200.

Required:

(i) Determine the marginal rate of substitution of alcohol for bread.

(ii) Suppose the level of consumer’s income is subjected to a housing levy of 1.5% while the price per unit of bread and the price per unit of alcohol increases by 10%, determine the marginal rate of substitution of bread for alcohol.

7c

Inflation and unemployment

Using an appropriate diagram, explain how a fiscal policy may be used to control a deflationary gap in an economy.

7d

Demand, supply and determination of equilibrium

With the help of a well-labelled diagram, explain the relationship between the “long-run average cost curve” and the “short-run average cost curve”.

December 2023

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