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November 2015

Unit: Economics

20 Questions

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Questions

1a
Demand, supply and determination of equilibrium
​ ​ ​​ With the aid of a diagram, describe the concept of unstable market equilibrium.
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1b
Demand, supply and determination of equilibrium
​ ​​ "All giffen goods are inferior goods but not all inferior goods are giffen goods". 

Using a relevant diagram, explain the above statement.
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1c
Introduction to economics
​​rgue five cases for and five cases against specialisation as a method of production.
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2a
Demand, supply and determination of equilibrium
​​Outline four arguments upon which trade unions base their demand for increase in wages for unionisable employees.
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2b
Demand, supply and determination of equilibrium
​​State six effects of price decontrols to an economy.
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2c
Demand, supply and determination of equilibrium
​​Analyse six uses of elasticity of demand in decision making.
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2d
Demand, supply and determination of equilibrium
​ ​ ​​The following information relate to the price per unit and quantity supplied of a certain product:

Price per unit (Sh.)
12
10
8
5
2
Quantity supplied (Units)
12,000
11,000
9,000
6,000
0

Required: 
Price elasticity of supply when price decreases from Sh.10 per unit to Sh.5 per unit. Interpret your result.

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3a
Demand, supply and determination of equilibrium
​​ Explain the term "optimal size of a firm".
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3b
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 super normal profits in the short-run.
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3c
Demand, supply and determination of equilibrium
​​(i) Summarise seven barriers to geographical mobility of labour as a factor of production.

(ii) Highlight six measures that could be adopted by a government to enhance mobility of labour.

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4a
National income
​ ​​ Outline five problems associated with the expenditure approach of measuring the national income of a country.
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4b
Economic growth, economic development and economic planning
​​Enumerate five changes in the tax policy that could be implemented by a government to spur growth in the agricultural sector.
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4c
National income
​ ​​The following information relates to savings and investments of a certain economy in millions of shillings:
  • S =-500 + 0.36Y
  • I = 8.000
Where:
S = Savings function.
Y = National income.
I = Investments function.

Required:
(i) The consumption function.
(ii) The equilibrium level of national income.
(iii) The multiplier. Interpret your result.
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5a
Money and banking
​​Describe five instruments of monetary policy that could be used to control the level of money supply in an economy.
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5b
Money and banking
​​Discuss five factors that limit the effectiveness of monetary policies in developing countries.
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6a
Inflation and unemployment
​​Explain four effects of inflation on the functions of money.
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6b
Economic growth, economic development and economic planning
​​(i) Outline six causes of high levels of external debts in developing countries.

(ii) Summarise six policies that could be adopted to combat the problem of high levels of external debts in developing countries. 

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7a
Money and banking
​​ Highlight five determinants of money supply in an economy.
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7b
Money and banking
​​Describe five differences between commercial banks and non-banking financial institutions.
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7c
National income
​ ​​The data provided below represent estimated national income figures for country "X" in trillion of shillings:

Gross National Product (at market price) 
620.4
Government transfers
78.6
Business taxes 
18.2
Personal income taxes
56.1
Depreciation allowance
42.3
Indirect taxes less subsides
36.5

Required: 
(i) Net National Income at factor cost. 

(ii) Net National Product at market price. 

(iii) Personal income. 

(iv) Disposable income for country "X".
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