ATTEMPT ALL QUESTIONS ON NATIONAL INCOME 2 ASSIGNMENT

SECTION A

1       Given GNP at factor cost, how would you derive GDP at market price?                                          (5 mrks)

2       Given a country’s GNP_MP, what adjustments can you make get the country’s NNP_{FC                      (5 mrks)}

3       Given NNP_MP, what adjustment can you make to get NDP_FC?                                                            (5 mrks)

4       Given that a country’s stock of machinery is valued at shs. 100 billion at the start of the year, the total output from machinery during the year was shs. 500nbillion, depreciation costs during the year was 20%. Calculate the:

(i) value of depreciation

(ii)Net output                                                                                                                                                                (5 mrks)

5       Given monetary national income (MNI) value as US$2billions and price index of 2001. Calculate the Real national income.                    (5 mrks)

6(i)     Differentiate between injections and leakages in the circular flow of income                                                                                                        (5 mrks)

(ii) Mention two problems faced in measuring national income in your country.                                                            (5 mrks)

7      (i)What is an investment multiplier                                                                                                                    (2mrks)

(ii) Give any three ways being used to promote investments in your country.                                                                   (3 mrks)

8     Given that a household’s total income is shs.800,000 out of which it consumed shs. 180,000. What is the APC? (2 mrks)

9     Given that MPC=25% and income increases from shs.30,000 to shs. 50,000, what will be the change in consumption?  (5 mrks)

10    Given that income has changed from shs.80,000 to shs.100,000 and that the MPC is 0.5, what will be the new level of consumption if the original level of consumption was shs.25,000? (5 mrks)

11    Given that a rise in national income by $480million led to an increase in savings from$1100million to $1800million. Determine the marginal propensity to save. (5 mrks)

12   Given that a country’s Gross domestic product (GDP) increased from 450million to 620million and the value of imports increased from 50million to 90million. Calculate the marginal propensity to import. (5 mrks)

13    Given that the MPC in a two sector model is 75%, initial investment is shs.30,000,000millions , initial income is shs.90,000,000millions and if investment increased by 7000millions. Calculate the:

(a)Value of multiplier

(b)New equilibrium level of income (5 mrks)

14    Given that the initial equilibrium level of national investment expenditure is shs. 80millions. Find the new equilibrium level of national income, if the MPC is 60%. (5 mrks)

15     Study the table below and answer the questions that follow:

(i)Calculate the value of MPC (2mks)

(ii) Determine the size of the multiplier (2mks)

(iii) Find the APS when national income is shs.1000milllions (2mks)

16    Given that the initial consumption is shs.12,000 and the new consumption is shs.15,000, and investment changed from shs.25,000 to shs.32,000. Calculate the accelerator coefficient.

17     The consumption of commodity A changes from shs. 100000 to shs.300,000 and as a result investment changes fromshs.500,000 to shs. 900,000. Calculate the accelerator.

18     Given that a country’s exports stand at $3200, imports at $2700, taxation at $1500, savings at $1800, investment at $8000, government expenditure at$4800, consumption at $400.

19(i)   calculate the value of leakages in the economy (2mks)

(ii) What is the level of aggregate demand? (2mks)

20    Study the following national income data

Exports (X) =20

Imports (m) =150

Investment (I) =100

Consumption ©=700

Government spending (G) =150

Taxation (T) =100

Savings (S) =200

National income (NY) =1000

(i)On the basis of the data, what can be deduced about the income level? Give reasons to support your answer

(ii)What is the level of leakages from the circular flow of income?

(iii)What is the level of aggregate demand?

21   What are the conditions of national income equilibrium? (5 mrks)

22   Distinguish between income gap and unemployment gap (5 mrks)