PAPER 1

1. (a) (i) Define the term effective demand
(ii) Give any three factors that limit effective demand in an economy

(b) (i) Distinguish between producers, surplus and consumers surplus
(ii) Given that the market price of a commodity is Uganda Shs 65,000, calculate the producer’s surplus in the table below

(c) (i) Differentiate between casual and residual unemployment
(ii) State any two effects of unemployed I an economy

(d) (i) What is meant by the term ‘’marginal propensity to import?’’

(e) (i)Distinguish between a reproductive debt and a dead weight debt
(ii)state any two ways in which a public debt can be redeemed.

2. (a)How does a firm in a monopolistic competitive market determine output, price and profits in the long run?
(b) Explain the merits and demerits of monopolistic competition

3. (a)why may a country adopt an export promotion strategy of industrial development?
(b)explain the limitations of the export promotion strategy of industrial development

4. Distinguish between labour supply and labour force
(b)Explain the factors that determine labour supply in economy

5. Given that the volume of money in an economy is $20 billion, total level of transactions is $250 million and the transactions velocity of money is 20; calculate the general price level in the economy.

(b)Explain the limitations of Irying Fisher’s quality theory of money

6. Distinguish between mild inflation and hyper inflation
(b) explain the effects of hyper inflation in an economy

7. Differentiate between taxation financing and debt financing
(b)why may a government rely more on debt financing than taxation financing