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CPA Economics – May 2016 Past Paper & Answers

Unit: Economics

22 Questions

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Questions

Download CPA Economics May 2016 past paper with detailed answers and marking scheme. This paper is based on KASNEB examination standards and is ideal for revision and exam preparation.

Access the full paper online, download the PDF, or study offline. Each question includes step-by-step solutions to help you understand key concepts in Economics.

Other Economics Past Papers

1a
Demand, supply and determination of equilibrium
​​Outline four assumptions underlying consumer equilibrium.
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1b
Introduction to economics
​ ​ ​ ​​ With the aid of a diagram, explain the production possibility frontier.
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1c
Demand, supply and determination of equilibrium
​​Summarise five ways through which the government could influence the allocation of resources in a free market economy.
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1d
Demand, supply and determination of equilibrium
​​Explain how the concept of elasticity of demand guides economic decision making in the following areas:

(i) Government tax policy on household consumption.

(ii) Devaluation policy.

(iii) Price discrimination by a monopolist.

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2a
Inflation and unemployment
​​Differentiate between the following sets of terms as used in economics:

(i) "Structural unemployment" and "keynesian unemployment".

(ii) "Narrow money" and "broad money". 

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2b
Demand, supply and determination of equilibrium
​​ Highlight five disadvantages of the monopoly market structure.
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2c
Demand, supply and determination of equilibrium
​ ​ ​​A certain market for commodity x contains 1,000 identical consumers, each having a demand function given as:
  • Qdx = 12- 2px.
The market contains 100 identical producers of commodity x, each with a supply function given by Qsx = 20р..
  • Qdx is the quantity demanded of x.
  • Qsx is the quantity supplied of x.
  • Px is the price of x.
Required:
(i) The market demand and market supply functions of commodity х. 

(ii) Using indifference curve analysis, illustrate the effect of a government subsidy on commodity x to low income
earners.
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3a
Economic growth, economic development and economic planning
​​ Discuss five policy measures that developing countries could adopt to reduce regional imbalances.
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3b
Demand, supply and determination of equilibrium
​ ​​ Using a well labelled diagram, evaluate the effect of simultaneous increase in demand and decrease in supply on equilibrium price and quantity of a commodity.
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3c
Demand, supply and determination of equilibrium
​​Discuss five'causes of the U-shaped long-run average cost curves of a firm.
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4a
Demand, supply and determination of equilibrium
​​Enumerate six barriers to occupational mobility of labour.
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4b
Demand, supply and determination of equilibrium
​ ​​ Illustrate the close down price of a firm operating under perfect competition.
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4c
Money and banking
​​Outline eight roles of commercial banks in boosting the economic development of a country.
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5a
National income
​​Explain five factors that determine the macroeconomic level of consumption in an economy.
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5b
National income
​ ​​The following data relate to the commodity and money markets of a hypothetical closed economy without government intervention, in millions of shillings:
  • C = 204 +0.7Y
  • 1 = 300 - 100r 
  • MDT = 0.25Y 
  • MDS = 248-200r 
  • Ms = 600 
Where:

  • C is the consumption function.
  • Y is the national income.
  • I is the investments function.
  • r is the rate of interest.
  • MDT is the precautionary and transactionary demand for money.
  • Mps is the speculative demand for money.
  • Ms is the money supply.

Required:

(i) Equilibrium level of interest rate.

(ii) Equilibrium level of national income.

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6a
National income
​​Explain the term "balance of payments" as used in international trade.
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6b
Demand, supply and determination of equilibrium
​ ​​ With the aid of an appropriate diagram, explain the condition under which a firm operating under oligopoly market structure would make losses in the short-run.
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6c
Money and banking
​​ Examine six roles of non-banking financial institutions in an economy.
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6d
National income
​Describe three ways in which a government could use fiscal policy to stimulate economic growth.
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7a
Inflation and unemployment
​​Summarise five causes of inflation in developing countries.
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7b
National income
​​Highlight eight arguments in favour of international trade restrictions in a country.
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7c
Economic growth, economic development and economic planning
​​State seven economic goals of developing countries.
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