May 24, 2022

MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2016/2017 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS & ECONOMICS BACHELOR OF ARTS IN ECONOMICS COURSE CODE: ECO 422 COURSE TITLE: PROJECT APPRAISAL AND EVALUATION DATE: 16TH MAY, 2017 TIME: 8.30 – 10.30AM INSTRUCTIONS TO CANDIDATES 1. Answer Question One and any other three. 2. DO NOT WRITE ANYTHING ON THE QUESTION PAPER. This paper consists of 2 printed pages. Please turn over Question One (Compulsory) (a) Using relevant examples, distinguish between projects and programmes. (15 marks) (b) Your firm is trying to decide whether or not to invest in a new project opportunity based on the following information. The initial cash outlay will total KSh 25,000,000 over two years. The firm expects to invest KSh 20,000,000 immediately and the final KSh 5,000,000 in one year’s time. The company predicts that the project will generate a stream of earnings of KSh 5,000,000, KSh 10,000,000, KSh 20,000,000, and Ksh 7,500,000 per year, respectively, starting in Year 2. The required rate of return is 12%, and the expected rate of inflation over the life of the project is forecast to remain steady at 3%. Should your firm invest in this project? (10 marks) Question Two Mrs Mary Kutit has been appointed as the Director in the Planning Department of one of the Counties in Kenya. Her first assignment is to develop a criteria that will allow the Department to effectively screen project alternatives. Explain the issues that you would advise her to include in the criteria. (15 marks) Question Three Various international financial institutions like the World Bank, African Development Bank and Asian Development Bank frequently use Social Cost Benefit Analysis technique for project appraisal. Discuss the strengths and weaknesses of the technique. (15 marks) Question Four Using relevant examples, discuss the benefits of using milestones as a form of project control. (15 marks) Question Five Using relevant examples, differentiate between project monitoring and evaluation. (15 marks)  

  MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2016/2017 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS IN ECONOMICS   COURSE CODE: ECO 421 COURSE TITLE: MONETARY THEORY AND POLICY DATE: 10TH MAY 2017 TIME: 11:00 – 13:00HRS INSTRUCTIONS TO CANDIDATES Answer Question ONE and any other THREE questions This paper consists of TWO printed pages. Please turn over. QUESTION ONE a) In the Baumol Transaction Demand for money model, money demand is determined by a number of factors. Mercy earns KES 50,000 per month and can invest the money in interest earning ventures at 5% per year. i. What must be the per-transaction be to ensure that her average holdings are KES 10,000 per month? (5mks) ii. Assume her income changes to KES 60,000, the interest on saving moves to 4.5%, and the per-transaction cost moves to KES 3.12. What will be her new optimal money holding? (4mks) iii. Comment on the relationship between the per-transaction cost and the demand for money holding by Mercy. (1mk) b) With the aid of a well-labelled diagram, explain the concept of liquidity trap. (5mks) c) In the context of your country using suitable examples, discuss the functions of Non-Bank Financial Institutions(NBFI’s). (10mks) QUESTION TWO a) In the Kenyan context, explain the roles that the money market plays in the economy. (7mks) b) Compare and contrast bank and Non-Bank Financial Institutions. (8mks) QUESTION THREE a) Explain the key objectives of monetary policy in a country. (7mks) b) Discuss the tools that the Central Bank of Kenya would use to effect its monetary policy functions. (8mks) QUESTION FOUR a) Discuss the Cambridge cash balance approach to demand for money. What are the key criticisms to this approach? (8mks) b) Explain the Keynesian approach to money demand. (7mks) QUESTION FIVE a) Discuss the pros and cons of the barter system of trade. (6mks) b) If the required reserve ratio ratio is ten percent, the currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion. Calculate the money supply, monetary base and money the money multiplier. (6mks) c) Explain any three properties that a commodity must possess to be used as money. (3 mks)

MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2016/2017 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS IN ECONOMICS   COURSE CODE: ECO 419 COURSE TITLE: ECONOMICS OF LABOUR AND INDUSTRY II DATE: 15TH MAY 2017 TIME: 11:00 – 13:00HRS INSTRUCTIONS TO CANDIDATES Answer Question ONE and any other THREE questions This paper consists of THREE printed pages. Please turn over. QUESTION ONE a) Discuss the main causes of wage differentials in Kenyan labour market. (5mks) b) Explain the modern theory of wages under perfect competition.(5mks) c) Suppose that the demand and supply functions for unskilled labour in a market; Demand: LD=10-0.5w Supply: LS=6+0.9w Where L is millions of workers and w is the hourly rate. i. Determine the equilibrium wage rate and the number of workers employed. (4mks) ii. If the Kenyan government through the Ministry of Labour sets a minimum of KES 10.5 per hour. Find the wage rate and the quantity of labour employed. Compare your answer for part c(i), how many workers will lose their jobs? (8mks) d) Discuss the advantages and disadvantages of internal labour markets. (3mks) QUESTION TWO a) Explain why the term derived demand is used to describe the demand for factors of production. (5mks) b) Critically assess the argument that perfect competition is the most desirable market situation. (4mks) c) In what ways does the heterogeneity of labour complicate an analysis of demand of labour? (3mks) d) Explain why common property resources tend to be over exploited. (3mks) QUESTION THREE a) Suppose that a monopolist had some product that was acquired with zero marginal cost. i. What price should the monopolist charge for this product? (3mks) ii. Determine the quantity of the product that should be sold in order to maximize total revenue. (3mks) b) Explain the role technical innovation plays in the strategy of an oligopolist. (4mks) c) Discuss the case for the government involvement in markets. (5mks) QUESTION FOUR a) Distinguish between the following concepts. i. Horizontal integration and vertical integration. (2mks) ii. Economies of scale and economies of scope. (2mks) iii. Nominal wages and real wages. (2mks) b) Why does pay tend to rise with age? Is this fair to young workers?(5mks) c) Explain principle agent theory using examples and illustrations.(4mks) QUESTION FIVE a) Explain the following concepts as used in labour economics; (7mks) i. Regulation ii. Privatization iii. Allocative efficiency iv. Pareto optimality v. Asymmetric information vi. Predatory pricing vii. Paternalism b) Explain the difference between the Keynesian labour market and the Friedman-Phelp labour market. (4mks) c) If the labour demand and labour supply curves intersect above the negotiated wage (w). Explain the implications of this on the AS curve. (4mks)

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  MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2013/2014 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS IN ECONOMICS COURSE CODE: ECO 417 COURSE TITLE: AGRICULTURAL ECONOMICS II   DATE: 24TH APRIL, 2014 TIME: 2.00 – 5.00 P.M. INSTRUCTIONS TO CANDIDATES Question ONE is compulsory Answer any other TWO questions This paper consists of 3 printed pages. Please turn over. QUESTION ONE a) Explain the meaning of the following terms: (i) Agricultural Economics (ii) Agricultural Production Economics (iii) Farm Management (iv) Agricultural Marketing (v) Agricultural Finance (5 mks) b) The Kenya Vision 2030 blueprint envisions agricultural growth rate of 7% to contribute to the overall economic growth of 10%. Clearly highlight the key initiatives that drive the growth of the sector. (5 mks) c) According to the third annual progress report 2008-2012) clearly explain the progress that the sector has made towards the achievement of the projected growth rate. (10 mks) d) Explain two key policy directions by the Kenya government to ensure adequate domestic food supply. (5 mks) QUESTION TWO a) For centuries, governments have worked towards ensuring food availability to their constituents. Explain some of the conventional policies to improve food supply and food security. (8 mks) b) Developing economies have used a variety of macroeconomic models to build and focus on improved agricultural production. Highlight some of the commonly used models. (7 mks) QUESTION THREE a) Agriculture plays a crucial role in the life of an economy. Explain the importance of agriculture in the Kenyan economy. (8 mks) b) National income which implies the people’s income enhances the standards of living in the economy. Discuss. (7 mks) QUESTION FOUR a) It has been argued for decades that monetary policy and exchange rates are more important than agricultural policy in determining farm income and its variability. Discuss. (6 mks) b) In economics, wealth is synonymous with economic goods and consists of all potentially exchangeable means of satisfying human wants. i) Highlight the major characteristics of wealth. (3 mks) ii) Explain the types of wealth and distinguish between wealth and welfare. (6 mks) QUESTION FIVE In order for a government to boost agricultural production, they impose commercial policies which are basically imposed in order to safeguard the local industries. Critically evaluate the arguments for imposing commercial policies. (15 mks)  

  MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2016/2017 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS IN ECONOMICS   COURSE CODE: ECO 415 COURSE TITLE: INTERNATIONAL ECONOMICS II DATE: 12TH MAY 2017 TIME: 11:00 – 13:00HRS INSTRUCTIONS TO CANDIDATES Answer Question ONE and any other THREE questions This paper consists of TWO printed pages. Please turn over. QUESTION ONE A) Kenya has never recorded a positive balance of trade since independence in 1963, explain why this is the case and how it has managed to fulfill its international trade obligations (8marks) B) Explain the THREE main functions of the spot Market for foreign exchange (6marks) C) Discuss the development of money as a medium of exchange (6marks) D) Explain the role of demand for and supply of precious metals (specie) in determining the price of money ( 5marks) QUESTION TWO A) International trade can be distinguished from domestic trade by two basic characteristics. Explain these characteristics (5marks) B) Discuss the role of exchange rate in determining nature and direction of international trade (5marks) C) Explain the law of one price (5marks) QUESTION THREE a) Explain the participants in the Foreign Exchange market (5marks) b) Discuss the functions of Foreign Exchange Market (6marks) c) Explain the difference between hedging and speculating (4marks) QUESTION FOUR A) Explain the link between foreign exchange markets and financial markets (7marks) B) Whenever covered interest parity does not hold, there are opportunities of making riskless profit through interest arbitrage. Discuss (8marks) QUESTION FIVE a) Explain how a government can maintain exchange rate outside equilibrium levels under fixed exchange. (7marks) b) Use the supply and demand model of the foreign exchange market to analyse the effects of a rise in the price level of the USA relative to that of Kenya under a flexible exchange rate regime (8marks)

  MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2013/2014 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS IN ECONOMICS COURSE CODE: ECO 413 COURSE TITLE: ECONOMETRICS   DATE: 16TH APRIL, 2014 TIME: 9.00A.M – 12.00 P.M. INSTRUCTIONS TO CANDIDATES Question ONE is compulsory Answer any other TWO questions This paper consists of 2 printed pages. Please turn over. QUESTION 1 To confirm or refute that variable Y is influenced by variable X and Z data was collected. Y 15 21 29 41 53 61 81 93 104 126 X 2 6 15 21 24 40 50 68 80 98 Z 8 6 4 2 3 2 1 2 5 3 Test the hypothesis that X and/ or Z are important determinants of Y. (25 marks) QUESTION 2 Y1 = dY3 + e1 Y2 = b1Y3 + b2X1 + e2 Y3 = a1Y1 + a2Y2 + a3X2 + e3 i. Use rank condition to identify each equation (12 Marks) ii. For each equation explain the appropriate estimation technique. (3 marks) QUESTION 3 a. Justify the use of ordinary Least Square method in regression (2 marks) b. Use matrix algebra to prove two properties of OLS estimates (10 marks) c. Explain the possible causes of the random term in regression ( 3 marks) QUESTION 4 The following cross section data was collected to determine the nature of relationship between Y and X Y 15 50 56 9 96 40 28 40 15 60 14 10 28 56 28 x 9 4 6 7 16 3 6 1 8 3 5 7 9 2 14 Test for hetereoscedasticity (15 marks) QUESTION 5 a. Distinguish between the paired terms and explain the consequences of each i. Under fitting Vs Over fitting (5 marks) ii. Autocorrelation Vs Simultaneity (5 marks) b. Show the effect of perfect multicollinearity on i. Mean (2 marks) ii. Variance (3 marks)  

  MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2016/2017 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS (ECONOMICS) COURSE CODE: ECO 413 COURSE TITLE: ECONOMETRICS II DATE: 11TH MAY 2017 TIME: 0830 – 1030 HRS INSTRUCTIONS TO CANDIDATES Answer Question ONE and any other THREE questions This paper consists of 3 printed pages. Please turn over. QUESTION 1 Explain the assumptions of OLS method. ( 5 Marks) Enumerate the solutions to the problem of Multicollinearity. ( 5 Marks) Explain the meaning of DUMMY variable and why it is important in regression analysis. ( 5 Marks) If y=f(x_1,x_2,x_3 ) but someone estimates a simple linear for each independent variable identify the problem and explain the consequence. ( 5 Marks) Enumerate the characteristics of OLS estimates and explain why only one cannot suffice. ( 5 Marks) QUESTION 2 The following cross sectional data was presented for regression analysis using OLS method. However the supervisor doubts the authenticity due to suspected econometric problem. Y 11 9 6 13 11 12 13 14 9 6 8 11 10 9 8 12 13 10 10 9 11 12 X 3 5 4 6 2 9 4 4 5 4 3 5 4 5 2 6 3 5 3 3 6 5 Required: Test for the existence of the possible problem. (10 Marks) The consequences of the problem. (5 Marks) QUESTION 3 If the dependent variable Y is theorized to be influenced by X and Gen, and that data collected is presented as follows: Required: The linear regression coefficients. (8 Marks) Proportion of the dependent variable explained by X and Gen. (2 Marks) Interpretation of the coefficients. (3 Marks) The expression of Y if the dummy variable is assumed to affect the slope. (2 Marks) QUESTION 4 Time Series data is given as follow and ɖ = 0.6. (Where d is Durbin-Watson statistic) Yt 6 7 9 14 20 21 26 30 36 38 Xt 15 12 11 9 6 4 2 1 3 4 Required: Confirmation of the presence/absence of autocorrelation. (5 Marks) The coefficients of linear regression. (10 Marks) QUESTION 5 For a given medical course it is alleged that there is need for one to pass in mathematics and biology in order to be admitted. Data on performance of ten students randomly chosen is given as follows: Med 70 68 53 60 72 80 70 45 50 61 MATHS 40 44 45 50 40 80 60 60 50 58 BIOLOGY 80 72 45 60 79 82 80 47 40 50 Required: Whether or not the two mathematics and/or Biology should still be considered as prerequisites for the medical course. (15 Marks)  

MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2015/2016 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS ECONOMICS   COURSE CODE: ECO 411 COURSE TITLE: ADVANCED MACROECONOMICS DATE: 4TH MAY 2016 TIME: 8.30-10.30 INSTRUCTIONS TO CANDIDATES 1. Answer Question ONE and any other THREE questions This paper consists of TWO printed pages. Please turn over.   QUESTION ONE (a) Explain the conditions that make wages sticky (6mks) (b) Explain the counter reactions of equilibrium real business cycle theory under rational expectations on the Lucas model (4mks) (c) Suppose that consumption is reduced by the interest rate. Explain the effect on IS curve (3mks) (d) Assume that there is perfect mobility of capital, How does the imposition of a tariff affect the exchange rate, output and the current account? (8mks) (e) Suppose a linear production function is given as Y=f (K, L). By using this production function, derive the equation measuring the income growth rate. (4mks) QUESTION TWO (a) Distinguish between warranted, actual and natural rates of growth in the Harrod-Domar growth model. (6mks) (b) Derive warranted rate of growth from the model. (3mks) (c) Explain the role of technological progress in the process of increasing saving and investment within the endogenous growth theory. (6mks) QUESTION THREE (a) Explain the relationship of the actual real wage, employment, output to the ratio of actual price to expected price in the Lucas supply curve of imperfect information. (9mks) (b) Illustrate the effect of an increase in money stock on output with (i) Anticipated money (3mks) (ii) Unanticipated money (3mks) QUESTION FOUR (a) Show that a given change in money stock has a larger effect on output the less interest sensitive is demand for money (5mks) (b) Explain the pattern of declining output and declining interest rates using the IS-LM model for an economy experience a fall in treasury bill rate and a deeper recession (6mks) (c) Explain the effect of the IS curve slope as a factor in determining the working of monetary policy (4mks) QUESTION FIVE (a) Given the following structural equations in an ope economy. Where the aggregate spending by domestic residents is A=C+cY-bi and net exports, NX=X-Q import spending Q=M+mY where M is autonomous import spending. Exports are given and are equal to X=X- Suppose that; C=400, c=0.8, i0=5%, b=30, M=0, m=0.2, X=250 (i) Calculate the equilibrium level of income (4mks) (ii) Calculate the balance of trade (2mks) (iii) Calculate the open economy multiplier (2mks) (iv) What are the assumptions made above (2mks) (b) Discuss the frictionless neoclassical model of the labor market. (5mks)  

MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2016/2017 ACADEMIC YEAR FOURTH YEAR SECOND SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS IN ECONOMICS   COURSE CODE: ECO 411 COURSE TITLE: ADVANCED MACROECONOMICS DATE: 9TH MAY 2017 TIME: 08:30 – 10:30HRS INSTRUCTIONS TO CANDIDATES Answer Question ONE and any other THREE questions This paper consists of THREE printed pages. Please turn over. QUESTION ONE a) What is the contribution of the central bank to the money supply process? (7 marks) b) Increase in the nominal wage (W) financed by taxes is unhealthy for the economy. Discuss (7marks) c) Mathematically, Derive growth accounting equation in per capita terms (6marks) d) Explain the use of multiplier in economic analysis (5 marks) QUESTION TWO a) Explain the relevance of Okun’s law on employment policy measures (5marks) b) Explain the effect of the increase in desire to save on equilibrium income (5marks) c) Prove that tax rate multiplier is always negative (5marks) QUESTION THREE (a) Using a four quadrant diagram, discuss the effect of the following on equilibrium interest rate (r) and income (Y): i. An increase in money supply (5 marks) ii. An increase in the price level (5marks) (b) With reference to the income and substation effects, give an account for backward bending labour supply curve for the economy (5marks) QUESTION FOUR Given the following equations for a certain economy C = 100 + 0.9Yd – Consumption Function I = 200 – 500r – Investment function X = 100 – Export M = 0.12Y – 500r – Imports function G = 200 – Government purchases T = 0.2 – Tax Rate L = Y – 100r – Real money demand MS = 800 – Real Money supply Calculate: i. Transaction demand for money (5marks) ii. Net export (4marks) iii. Monetary policy multiplier (6marks) QUESTION FIVE A) Derive fiscal policy multiplier (7marks) B) Given the following C = 100 + 0.8Yd – Consumption function I = 10 – 10r – Investment function L = Y – 100r – Real money demand G =10 – Government purchases T = 0.25 – Tax rate MS = 295 – Real money supply Suppose equilibrium income increases by 200, by how much must real money stock increase for the new level of income to be in equilibrium. (8marks)

  MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2013/2014 ACADEMIC YEAR SECOND YEAR FIRST SEMESTER SCHOOL OF BUSINESS AND ECONOMICS BACHELOR OF ARTS IN ECONOMICS   COURSE CODE: ECO 323 COURSE TITLE: PUBLIC FINANCE AND FISCAL POLICY FINANCE DATE:24TH APRIL 2014 TIME: 9.00AM – 12.00PM INSTRUCTIONS TO CANDIDATES Question ONE is compulsory Answer any other TWO questions QUESTION ONE a) Explain using illustration and relevant examples, the following economic concepts as used in public finance: (i) Social goods [3 marks] (ii) Fiscal externalities [3 marks] (iii) Optimum level of public goods [4 marks] (iv) Merit goods [2 marks] (v) Public debt [3 marks] b) Citing Kenyan examples, discuss privatization mechanism [10 marks] c) How is representative democracy theory used in fiscal decision to cater for voters interests in fiscal operations? [4marks] QUESTION TWO Using specific examples from less developed countries, explain the role of public enterprises in providing public commodities and promoting development. [20 marks] QUESTION THREE i) Explain why public debt is incurred by a country [8marks] ii) Discuss what is tax incidence, is it different from tax shifting? [7marks] iii) Explain with applicable example what a tax burden is. [5marks] QUESTION FOUR Using relevant examples enumerate on the various sources of Kenyan government funds, have these sources changed since independence? [20marks] QUESTION FIVE i) Explain five economic effects of public debt. [15marks] ii) What is budget deficit? [5marks]    

MAASAI MARA UNIVERSITY REGULAR UNIVERSITY EXAMINATIONS 2015/2016 ACADEMIC YEAR THIRD YEAR SECOND SEMESTER SCHOOL OF BUSINESS & ECONOMICS BACHELOR OF ARTS (ECONOMICS)   COURSE CODE: ECO 322 COURSE TITLE: ECONOMIC DEMOGRAPHY DATE: 11TH MAY 2016 TIME: 11.00AM – 1.00PM INSTRUCTIONS TO CANDIDATES Answer question ONE and any other THREE questions This paper consists of 3 printed pages. Please turn over. QUESTION 1 a) i). Explain the factors that cause the international migration of high level of educated manpower from less developing countries to developed countries. (6 marks) ii). Explain using examples and illustrations the concept of internal brain drain. (4 marks) b). Explain the relationship between a Lorenz curved and Gini coefficient. (6 marks) c). Discuss the theory of demographic transition. (9 marks) QUESTION 2 a). Discuss conditions necessary for economic growth to translate into improvements in the quality of life. (7 marks) b). “The poor are little seen, and even less is the nature of their poverty understood”. (Chambers 1983). Explain and comment on Chambers’ view of the obstacles in the way of rural development. (8 marks) QUESTION 3 a). Discuss three distinct conceptualizations of the likely response to population according to Bilsborrow. (1987). (3 marks) b). Explain why many economists blame minimum wage law for much of employment problems of youth. (5 marks) c i).Discuss the concept of the optimal amount of inequality . (4 marks) ii). What are some of the practical problems in determining how inequality is really optimal? (3 marks) QUESTION 4 a). Explain how the so-called house called or micro-economists of fertility relates to the theory of consumer choice. (6marks) b). Explain the following concepts as used in Economic demography. i. Malthusian population trap. (3marks) ii. Opportunity costs of a woman’s time (3 marks) iii. Macro population – development. (3marks) iv. Overlapping generation models (3 marks) QUSETION 5 a)i). Governments can influence the character, quality and content of their educational systems by manipulating important economic and non-economic factors or variables both outside of and within education systems. Discuss these external and internal factors. (5 marks) ii). Explain government policies that make education more relevant to the real meaning of development, (6 marks) b). Discuss the essential assumptions and features of Lewis- Fei- Ranis surplus labour model of development. (4 marks)