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BF 160

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34 views

BF 160

Uploaded by

zulanilydia41
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 6

BANKING AND FINANCE CERTIFICATE

BF 160: Economics

7th OCTOBER 2015


----------------------------------------------------------------------------------------------------
3 Hrs + 15 minutes
INSTRUCTIONS TO CANDIDATES

1. Read the instructions on the cover of the Answer Booklet.


2. There are Eight (8) questions. Answer any five (5) questions.
3. Each question is worth Twenty Marks. The number in the brackets after a
question or part of the question shows the marks allocated.
4. You are reminded that orderly presentation and clear writing are essential
in your answers.
5. Silent, non-programmable calculators only may be used in this
examination. Whether or not you use a calculator, it is in your best interest
to show your calculations.
6. No books, papers or any other aids may be used in this examination.

PLEASE TURN OVER

1
QUESTION ONE
The table below shows Mr. Siyongili Silumba’s farm operations in Kalabo
District when a fixed amount of land is cultivated.
(a) Calculate and complete the columns for Additional Output and Average
Output per worker: (10 marks)

Units of Number of Workers Output per Addition Average


Land employed (each with year (tonnes (contribution) Output per
equal amount of of maize) to Output worker
farming equipment)
1 1 100
1 2 210
1 3 330
1 4 460
1 5 600
1 6 730
1 7 850
1 8 960
1 9 1,060
1 10 1,150
1 11 1,230
1 12 1,290
1 13 1,305
1 14 1,315

(b) According to the table above, what happens when five workers or more
are employed?
(5 Marks)

(c) Explain the meaning and essential features of the Law of Diminishing
Returns? (5 Marks)

[Total Marks: 20]

2
QUESTION TWO
(a) What do you understand by the phrase ‘mobility of the factors of
production’? (6 marks)

(b) What is the meaning of the term ‘capital’ to an economist? (4 Marks)

(c) When the amount demanded of a commodity is greater, the lower the price,
other things remaining the same.

Explain this statement with special reference to the significance of ‘other


things remaining the same.’ (10 Marks)

[Total Marks: 20]

QUESTION THREE

(a) If there are few sellers and a few buyers in the market, the prices at which
the commodities will be sold probably shall be determined by haggling.
( i ) What is meant by price discrimination? (2 Marks)

( ii ) Outline at least four conditions for price discrimination to prevail.


(4 Marks)
(b) Mention any three advantages and three disadvantages of a Monopoly.
(6 Marks)
(c) Distinguish between the terms “National Income” and “Value of National
Production”. (8 Marks)

[Total Marks: 20]

3
QUESTION FOUR

The use of money has been in existence for quite some time now. Under the
most primitive conditions of human existence, each family provided for its
entire needs, though even then there was probably some division of labour
among the members. Thus, goods were employed as money before coins and
bank notes were introduced.
(a) Discuss any four main functions of money? (4 Marks)

(b) Irving Fisher formulated the Quantity Theory of money.

(i) State Fisher’s Quantity Theory of Money using the symbols T, M, V


and P.
(4 Marks)
(ii) Explain the meaning of each of the four elements in ( i ) above?
(4 Marks)

(c) What do you understand by the distinction between “cost inflation” and
“demand inflation”. (8 Marks)

[Total Marks: 20]

QUESTION FIVE
(a) Mention any four main functions of a Commercial Banks in Zambia.
(4 Marks)

(b) Outline any four liabilities and four assets in the balance sheet of a
Commercial Bank. (8 Marks)

(c) Explain the functions of the Zambian Money Market and comment on it’s
economic significance to the country’s economy. (8 Marks)

[Total Marks: 20]

4
QUESTION SIX
(a) Mention any three functions of the Lusaka Stock Exchange? (6 Marks)

(b) What do you understand by Zambia’s balance of payments? (4 Marks)

(c) It has been reported in various media organizations by policy markers that
Zambia faced a considerable deficit in its balance of payments in 2015.

Mention any five ways in which the deficit could be eliminated or reduced?
(10 Marks)

[Total Marks: 20]

QUESTION SEVEN
(a) Mention any three advantages and three disadvantages of a flexible
exchange rate. (6 Marks)

(b) In what circumstances will a country benefit from currency devaluation?


(10 Marks)

(c) Why will you not recommend that Zambia should raise the foreign exchange
value of the Kwacha? (4 Marks)

[Total Marks: 20]

5
QUESTION EIGHT
(a) Explain the importance of the multiplier in modern economic policy?
(8 Marks)

(b) Mention any four benefits which Zambia finds in trading with SADC,
COMESA and other countries around the globe? (4 marks)

( c ) What are the four most important services that are provided by the
central bank to the government? (8 marks)

[Total Marks: 20]

END OF EXAMINATION

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