2. a) ‘money can only be defined in terms of its function.’ Discuss
c) why do people hold money when they can earn interest by lending it to others or buying interest yielding bonds of the companies?
d) Through which instruments does the central bank control money supply?
3. a) list three barriers to trade.
b) outline five arguments in favor of trade restrictions.
c) Explain the rationale behind regional integration.
4. a) discuss the main reasons why an economy needs a public sector.
b) using relevant examples distinguish between positive and negative externalities.
c) outline the alternative methods of dealing with (correcting) externalities.
5. the following hypothetical data relate to an imaginary African country.
GNP- 8000000
Depreciation- 100000
Indirect business taxes- 80000
Gross investment- 400000
Total population- 30000
Consumption- 10000
Personal income taxes- 800
Excise duty- 80
Personal income- 89000
Calculate:
i. Net national product
ii. GNP per capita
iii. Net investment
iv. Disposable personal income
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