Principles of Macroeconomics (ECNC2202)
Higher Institute of Commerce and Management (HICM)
Semester: Second Semester
Level: 200
Year: 2013
Instructions: Answer the questions in the sequence they appear.
Questions (15 marks) NB: Only (3) and (11) score 2 marks each, the rest score 1 mark each.
1) What is the primary objective of macroeconomics? (a sentence)
2) Name three factors that explain the inverse relationship between aggregate demand and general price
level. (3 phrases)
3) Define the Marginal Efficiency of Capital (MEC) and indicate how it guides investment decision.
4) Which mechanism explains changes in investment because of changes in national income? (1 or 2
words)
5) How is unemployment rate calculated? (an expression)
6) What do you understand by demand deficient or cyclical unemployment? (a sentence)
7) Inflation is measured using two price indices. Name them (2 phrases)
8) How can increase in the cash or liquidity ratio requirements on commercial banks help in checking
inflation? (2 or 3 lines)
9) State the three reasons or motives why people hold money, as prescribed by the liquidity preference
theory. (3 phrases)
10) Why is the money supply curve inelastic with respect to interest rate? (1 sentence)
11) How does the Heckscher-Ohlin (H-O) theory best describe international trade between Cameroon
and the rest of the world? (3 or 4 lines)
12) Differentiate between ad valerem and specific tariff systems. (2 sentences)
13) How can devaluation help redress a balance of payment deficit? (2 or 3 lines)
EXERCISE 1 (5 marks)
Given the following components of the national income of a country:
Components Expenses in millions of CFA francs
Total final expenditure at market prices 500
Gross domestic product at market prices 420
Subsidies 30
Gross domestic product at factor cost 365
Gross national product at factor cost 360
Net national product at factor cost 340
Required:
1) Determine the value of indirect taxes.
2) Determine the value of imports.
3) Determine the value of consumption capital.
4) What is the value of net property income from abroad (NPIA)?
5) Justify the sign of the answer in (4) above.
SCHOOL/FACULTY: H.I.C.M DEPARTMENT:
COURSE CODE: COURSE TITLE: Principles of Macroeconomics
SEMESTER: Second NATURE: Exam LEVEL: One
LECTURER: Prof. Tafah Edokat/ Dr. Ndamsa Dickson DATE: 23/07/2013 HALL: DURATION: 3Hrs
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
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