ECO341- Macroeconomics NOUN Past Questions

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ECO341- Macroeconomics NOUN Past Questions

Postby Adele » Mon Jun 25, 2018 10:55 am

October/November Examination 2016

Course Code: ECO 341
Course Title: Macroeconomics
Credit unit: 3
Time Allowed: 3 hours
Instruction: Answer QUESTION ONE (COMPULSORY) and any other two questions
Question :
1.A classical model of a closed economy is given as Y = C + I;
C = 200 + .65Y and I = 750
a. National Income (Y) equilibrium
b. National income multiplier if Investment changes to 950 and consumption function becomes C = 250 + 0.75Y. (25 MARKS)

2a. State two major difference between financial investment and real investment. Give examples.
2b. State three factors responsible for the shift of Marginal Efficiency of Capital (MEI). (15 MARKS)

3a. With the aid of diagram clearly state the difference between inflationary gap and deflationary gap
3b. Mention three factors that are responsible for inflationary gap in an economy.(15 MARKS)

4a. What is financial intermediation?
4b. Money supply in an economy is a function of credit creation variables. Explain.(15 MARKS)

5. Economic policies revolves round both fiscal policies and monetary policies. Identify and explain three objectives of these economic policies.(15 MARKS)

6. The trade-offs and conflicts found in macroeconomic policy objectives have led to economic distortions. Identify and explain two of these conflicts.(15 MARKS)

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