Principles of Macroeconomics (ECNC2202)
Higher Institute of Commerce and Management (HICM)
Semester: Second Semester
Level: 200
Year: 2018
INSTRUCTIONS : Answer the questions in the sequence they appear.
Question 1 (25 marks) [each question carries 2 marks, except question (iii) that has 3
marks]
i. How are macroeconomics and microeconomics complementaery in terms of
economic policy ? (at most 4 lines)
ii. State the relative income hypothesis (1 sentence)
iii. Which economic principle shows how the expected change change in national
income (output) affects the level of aggregate net investment ? (1 or 2 words)
-Provide one limitation of this economic principle.
iv. State and briefly explain two factors which can cause a shift in the aggregate demand
curve.
v. What is structural unemployment ? (at most 2 lines)
vi. What is the main economic message driven by the Phillips curve ? (1 sentence)
vii. Why is it that a change in the cost of labour will not shift the aggregate supply curve
in the long run ? (at most 3 lines)
viii. Why is it that the net property income for most developing countries, like
Cameroon, is most likely to be negative ?
ix. What is the most stubborn type of unemployment a country can experience ? Why (at
most 2 lines)
x. Creeping inflation can sometimes be good for an economy. Justify (at most 4 lines)
xi. Why is it that at higher interest rates investment is low ? (at most 3 lines)
xii. Define the marginal efficiency of capital.
Question 2 (25 marks)
Suppose we are given the following hypothetical values of components in the national
income accounts of a particular country. Note that all expenditure items are measured at
market prices.
Expenditure and income Components Values in CFA francs
Consumer's expenses 140000
Income from employment 210000
Income from self-employment 15000
Government final consumption 55000
Gross domestic fixed capital formation 25000
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
SCHOOL/FACULTY: H.I.C.M DEPARTMENT: Management
COURSE CODE: ECNC 102 COURSE TITLE: Principles of Macroeconomics
SEMESTER: Second NATURE: Exam LEVEL: 100
LECTURER: Mr Laisin Innocent/ Dr Ndamsa Dickson DATE: 2018 Session HALL: DURATION: 3Hrs
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Expenditure and income Components Values in CFA francs
Work in progress 2000
Gross trading profits of companies 60000
Exports of goods and services 47000
Gross trading profits of companies 60000
Imports of goods and services 42000
Net property income from abroad 50
Taxes on expenditure 60000
Imputed charge for the consumption of non-
trading capital
4000
Stock depreciation 8000
Subsidies 10000
Rents 1400
Capital consumption 25000
Required :
i. Identify all the income and expenditure items. Use a table to present your answer ( 4
marks)
Calculate :
ii. TDE at market prices (3 marks)
iii. TFE at market prices ( 3 marks)
iv. Gross domestic expenditure/product at market prices (3 marks)
v. Gross domestic product at factor cost (using the expenditure items) (2 marks)
vi. Total domestic income (using the income items). Note : use stock depreciation =
8000. ( 3 marks)
vii. What is the value of the residual error, to adjust income value of GDP to suit the
expenditure value ? (3 marks)
viii. Gross national product at factor cost (2 marks)
ix. Net national expenditure/income (2 marks)
Question 3 (20 marks)
An increase in aggregate demand, with aggregate supply held constant, will lead to higher
prices of goods and services in the long run than in the short run. Explain using appropriate
graphs.
Good luck !
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