Introduction to Macroeconomics (ECNC2202)
Higher Institute of Commerce and Management (HICM)
Semester: Second Semester
Level: 200
Year: 2016
Section 1 (10 marks)
You are an economic consultant at the National Institute of Statistics, Cameroon. During a national income
analysis, you were asked to provide concise meaning to the following national income concepts:
(a) Gross domestic product.
(b) Gross national product.
(c) Net national product.
(d) Nominal versus Real national income.
(e) National income at market price versus National income at factor cost.
Section 2 (15 marks)
Using appropriate graphs, explain the state that an increase in aggregate demand, with aggregate supply held
constant, has a more severe effect on the general price level in the long run than in the short run.
Section 3 (15 marks)
Assume the consumption function for a ‘Utopia’ economy, closed and with a government is given as
follows:
C = a + b Y
d,
where Y
d
is disposable income.
a > 0 and 0 < b < 1
i. Differentiate between permanent income hypothesis and relative income hypothesis. (2 marks)
ii. Explain the economic interpretations of the parameters a, b and bY
d.
(2 marks)
iii. In ‘Utopia’, when disposable income increases by 1000 millions, consumption increases by 800
million and when disposable income is zero, consumption stands at 400 million. Determine the
consumption function using this information. (4 marks)
iv. Deduce the savings function for this economy. Show your calculations. (3 marks)
v. Sketch the consumption and saving functions on separate graphs, identifying the segments of the
graph representing dissaving’s and savings. (2 marks)
vi. What do you understand by dissaving? And what does the slope of each graph represent? (2 marks)
Good Luck.
SCHOOL/FACULTY: H.I.C.M DEPARTMENT: All Departments
COURSE CODE: ECNC102 COURSE TITLE: Introduction to Macroeconomics
SEMESTER: Second NATURE: CA LEVEL:
LECTURER: Prof. Tafah Edokat/ Dr. Ndamsa Dickson DATE: 2016 HALL: DURATION:
REPUBLIC OF CAMEROON
Peace -Work – Fatherland
UNIVERSITY OF BAMENDA
P.O BOX 39 BAMENDA
TEL: 33 36 36 94
REPUBLIQUE DU CAMEROUN
Paix -Travail – Patrie
UNIVERSITE DE BAMENDA
P.O BOX 39 BAMENDA
TEL: 33 36 36 94
www.schoolfaqs.net
