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CPA Economics – May 2019 Past Paper & Answers

Unit: Economics

24 Questions

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Questions

Download CPA Economics May 2019 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
Money and banking
(i) Explain the Keynesian liquidity preference theory of demand for money.
(ii) Outline criticisms of the theory in (a) (i) above.
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1b
Demand, supply and determination of equilibrium
(i) Distinguish between "perfect oligopoly" and "imperfect oligopoly"
(ii) Describe methods used in fixing prices under the oligopoly market. structure.
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1c
Demand, supply and determination of equilibrium
​​Highlight factors that might lead to a rightward shift of the optimal point of a firm.
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2a
Introduction to economics
​ ​​(i) Enumerate characteristics of a free market economic system.
(ii) State advantages of a free market economic system.
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2b
Demand, supply and determination of equilibrium
​​Summarise factors that could lead to a leftward shift of the supply curve of a commodity.
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2c
Demand, supply and determination of equilibrium
​​(i) The total cost function.
(ii) The variable cost function.
(iii) The total profit of the firm when Q = 10 units.
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3a
Introduction to economics
​​(i) Explain the difference between the "cardinal approach" and the "ordinal approach" to measuring utility.
(ii) Outline limitations of the cardinal approach to measuring utility.
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3b
National income
​​Highlight factors that determine the effectiveness of trade unions in a society.
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3c
Demand, supply and determination of equilibrium
​​Discuss applications of elasticity of demand in economic decision making.
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4a
Demand, supply and determination of equilibrium
​With the aid of a well labelled diagram, explain the equilibrium level of a firm operating under an oligopolistic market structure,​
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4b
Demand, supply and determination of equilibrium
​​Summarise reasons why the prices of agricultural products fluctuate more than the prices of manufactured products
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4c
National income
​​Suggest policy measures that could be adopted by a government to enhance geographical mobility of labour within a country.
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4d
Demand, supply and determination of equilibrium
​(i) The average variable costs when the units produced are 2, 6 and 10 respectively.
(ii) The marginal costs of production for the 4th and 8 th units respectively.​
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5a
Inflation and unemployment
​​Differentiate between "demand deficient unemployment" and "disguised unemployment" as used in economics.
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5b
Money and banking
​​Enumerate effects of inflation on the functions of money.
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5c
Introduction to economics
​​Outline limitations of the theory of comparative advantage as used in international trade.
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5d
National income
​​The following data relate to the consumption function of a hypothetical economy in millions of shillings:

C = 300 + 0.6y

Where:

C is the consumption function. y is the national income.

(i) The investment function.

(ii) Discuss factors that determine the level of consumption in an economy.
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6a
Money and banking
​​Examine roles of foreign exchange reserves in an economy.
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6b
Inflation and unemployment
​​Describe factors that determine the terms of trade in a country.
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6c
Economic growth, economic development and economic planning
​​Explain causes of high levels of external debt in developing countries.
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6d
Money and banking
​​Analyse functions of non-banking financial institutions in an economy.
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7a
National income
​​Argue cases against the use of national income statistics to compare the standards of living between countries.
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7b
Demand, supply and determination of equilibrium
​​With the aid of an appropriate diagram, explain the relatioaship between the short run average cost curve and the long run average cost curve.
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7c
National income
​​The following information relates to the commodity and money markets of a certain closed economy in millions of shillings:

Commodity market
         C = 200 + 0.4y
          I = 1,900 - 12r

Money market
        MDT =0.5y
        MDS =100 - 10r
        MS = 1,500

Where:   C = Consumption function
               y = National income
               I = Investment function
               r = Rate of interest
               MDT = Speculative demand for money
               MDs = Money supply

Required:
(i) The IS function.
(ii) The LM function.
(iii) The equilibrium level of interest rate
(iv) The equilibrium level of national income.
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