Question 1: Describe the open market operations technique of credit control employed by Central Bank.
Question 2: Describe the meaning of deficit in the Balance of Payments.
Question 3: State whether the given statements are true or false. Give some reasons to support your answer:
a) Capital formation is a flow.
b) Bread is always a consumer good.
c) Nominal GDP can never be less than Real GDP.
d) Gross domestic capital formation is always greater than gross fixed capital formation.
Question 4: Given below is the consumption function in an economy: C = 100 + 0.5Y.
With the help of numerical illustration show that in this economy as income raises APC will reduce.
Question 5: The savings function of an economy is S = - 200 + 0.25Y. The economy is in equilibrium when income is equivalent to 2,000. Compute:
a) Investment expenses at equilibrium level of income.
b) Autonomous consumption.
c) Investment multiplier.