DBIT304  MACROECONOMICS.

UNIVERSITY EXAMINATIONS: 2017/2018
EXAMINATION FOR THE DIPLOMA IN BUSINESS INFORMATION
TECHNOLOGY
DBIT304 MACROECONOMICS
FULLTIME/PARTIME
DATE: APRIL, 2018 TIME: 1 ½ HOURS
INSTRUCTIONS: Answer any THREE questions.

QUESTION ONE
a) Define the term unemployment hence explain why unemployment is a major policy issue in
developing countries. (6 Marks)
b) Distinguish between the following terms
(i) Currency devaluation and currency depreciation (4 Marks)
(ii) Distinguish between near money and money substitutes (2 Marks)
c) Discuss four functions of the central banks in an economy (8 Marks)
QUESTION TWO
a) (i) Define the term public/ national debt (1 Mark)
(ii) Evaluate five causes of huge national debts in Kenya (5 Marks)
(iii) Suggest 4 possible measures that can be implemented to alleviate the problem of huge national
debts in Kenya (4 Marks)
b) (i) Explain five challenges experienced by most nations while determining their national income
figures (5 Marks)
(ii) Fill in the missing columns in the following table (5 Marks)

QUESTION THREE
a) Explain FIVE reasons for imposing taxes in an economy. (5 Marks)
b) Discuss FIVE principles of a good tax system in an economy (5 Marks)
c) Explain THREE approaches used in measuring national income figures in a country. (6 Marks)
d) Describe FOUR policy measures that developing countries could adopt to reduce regional
imbalances (4 Marks)
QUESTION FOUR
a) Discuss THREE monetary policies that can be implemented by the central bank in an economy to
regulate supply of money (6 Marks)
b) Highlight FOUR advantages of international trade in an economy (4 Marks)
c) Define the term inflation hence evaluate FOUR causes of inflation in an economy (5 Marks)
d) Evaluate FIVE effects of high interest rates on growth and development of a country. (5 Marks)
QUESTION FIVE
a) Distinguish between economic growth and economic development (4 Marks)
b) Explain THREE functions of the government in an economy (3 Marks)
c) Explain THREE uses of National figures in a country (3 Marks)
d) Using an illustration, explain the vicious cycle of poverty in a nation (4 Marks)
e) Define the term business cycle hence explain the various phases (6 Marks)

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