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    Eet 201 Macroeconomics Theory Ii

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    dragon lab
    (1) The document contains an exam for a Macroeconomics Theory II course, with 5 compulsory questions testing various macroeconomic concepts. (2) Question 1 has 5 true/false statements to justify related to concepts like autonomous saving/investment, liquidity preference theory, and the effects of inflation on output, interest rates, and expenditure. (3) The other questions address topics such as balance of payments, aggregate demand curves, IS curves, consumption theories, inflation causes and types, and trade limitation tools.

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    Eet 201 Macroeconomics Theory Ii

    Uploaded by

    dragon lab
    37 views2 pages
    (1) The document contains an exam for a Macroeconomics Theory II course, with 5 compulsory questions testing various macroeconomic concepts. (2) Question 1 has 5 true/false statements to justify related to concepts like autonomous saving/investment, liquidity preference theory, and the effects of inflation on output, interest rates, and expenditure. (3) The other questions address topics such as balance of payments, aggregate demand curves, IS curves, consumption theories, inflation causes and types, and trade limitation tools.

    Original Title

    EET 201 MACROECONOMICS THEORY II(3)

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    (1) The document contains an exam for a Macroeconomics Theory II course, with 5 compulsory questions testing various macroeconomic concepts. (2) Question 1 has 5 true/false statements to justify related to concepts like autonomous saving/investment, liquidity preference theory, and the effects of inflation on output, interest rates, and expenditure. (3) The other questions address topics such as balance of payments, aggregate demand curves, IS curves, consumption theories, inflation causes and types, and trade limitation tools.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    37 views2 pages

    Eet 201 Macroeconomics Theory Ii

    Uploaded by

    dragon lab
    (1) The document contains an exam for a Macroeconomics Theory II course, with 5 compulsory questions testing various macroeconomic concepts. (2) Question 1 has 5 true/false statements to justify related to concepts like autonomous saving/investment, liquidity preference theory, and the effects of inflation on output, interest rates, and expenditure. (3) The other questions address topics such as balance of payments, aggregate demand curves, IS curves, consumption theories, inflation causes and types, and trade limitation tools.

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    © All Rights Reserved
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    of 2

    MACHAKOS UNIVERSITY

    University Examinations for 2019/2020 Academic Year


    SCHOOL OF BUSINESS AND ECONOMICS
    DEPARTMENT OF ECONOMICS
    SECOND YEAR ………. SEMESTER EXAMINATION FOR
    BACHELOR OF ECONOMICS AND FINANCE
    BACHELOR OF ECONOMICS AND STATISTICS
    BACHELOR OF ECONOMICS

    EET 201: MACROECONOMICS THEORY II


    DATE: TIME:
    INSTRUCTIONS
    1. Answer Question ONE and any other TWO questions
    2. Do not write on the question paper.

    QUESTION ONE (30 MARKS) (COMPULSORY)


    a) State whether the following statements are true or false. Justify your answer. (10 marks)
    i. Autonomous saving and autonomous investment are the same.
    ii. The liquidity preference theory assumes that, velocity of money and aggregate
    output are constant.
    iii. During the periods of high inflation the foreign prices of domestic goods increases
    and hence increase in output.
    iv. BP curve shows various combinations of income and interest rate which equilibrate
    money markets.
    v. During inflation, the monetary authority responds by reducing interest rate, which in
    turn reduces consumption and investment expenditure.
    b) Discuss causes and solutions to balance of payment disequilibrium. (10 marks)
    c) Discuss the factors that make the aggregate demand curve to be downward sloping.
    (10 marks)

    Examination Irregularity is punishable by expulsion Page 1 of 2


    QUESTION TWO (20 MARKS)
    a) Using Keynesian cross derive IS curve. In your own view what are factors that shift the IS
    curve? (8 marks)
    b) Distinguish between relative income hypothesis and permanent income hypothesis(4 marks)
    c) Discuss the determinants of labour demand in your country. (8 marks)

    QUESTION THREE (20 MARKS)


    a) In 1930s a major world event occurred that gave birth to macroeconomics as a branch of
    economics. Name the school that formalized this branch of economics, any two of its
    economists and discuss its major contributions. (8 marks)
    b) Using well labelled diagrams explain how a balance of payment deficit would be rectified
    under fixed exchange rate regime. (6 marks)
    c) Discuss any factors that shift the aggregate supply curve. (6 marks)

    QUESTION FOUR (20 MARKS)


    a) Discuss the effect monetary policy on the three ranges of LM curve. (10 marks)
    b) In his theory, Keynes believed that there are three motives for individuals to hold money.
    Discuss. (6 marks)
    c) Distinguish between Phillips curve and Okun’s law. (4 marks)

    QUESTION FIVE (20 MARKS)


    a) Explain the four basic principles of consumption expenditure as outlined in Keynes absolute
    income hypothesis. (4 marks)
    b) African economies are characterized with volatile inflation rates. Discuss types and causes
    to inflation in your country. (10 marks)
    c) Discuss any three tools used to limit trade. (6 marks)

    Examination Irregularity is punishable by expulsion Page 2 of 2

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