Category: Economics
Problems associated with “Laissez faire” system of economic organization
Consumer’s ignorance/exploitation Misallocation of resources Instability in economy Limited initiative to provide public goods Unemployment Income inequality Existence of monopolies Over exploitation of resources Inadequacy ... Read More
Assess the role of foreign capital investment in the development of your country.
Positive contribution It closes the saving-investment gap; the foreign capital into the country increases the national saving ability which finally leads to improvement in investment. ... Read More
Reasons/causes of voluntary unemployment are
People having enough money and other means of self-support that makes reluctant to take up the jobs before the money is finished Lazy labour force ... Read More
What is voluntary unemployment
Voluntary unemployment is a situation where the labour force is not willing to take up jobs at the ongoing wages rate and working conditions. Jobs ... Read More
Circumstances under which workers may demand for higher wages
Rising cost of living. Workers agitate for higher wages so as to cope with rising cost of living. In case of failure to pay the ... Read More
Merits and demerits or advantages and disadvantages of capital intensive production techniques
Merits of capital intensive techniques It is associated with the production of high quality products which command high prices It is associated with mass production ... Read More
Reasons why people evade paying taxes .
Existence of loopholes in the tax system Political sabotage Unfairly high tax Low income levels of people Desire to retain all earnings especially by business ... Read More
What are non-bank financial intermediaries?
Non-bank financial intermediaries are non-bank financial institution that receive deposits from the public and advance loans out, but do not create new deposits/credit. Read More
Examples of non-financial intermediaries
insurance firms, building societies development banks saving and credit schemes stock exchange housing finance co-operation hire purchase firm venture capitalists, currency exchanges, some microloan organizations, ... Read More
Tax evasion
Tax evasion is a deliberate refusal by a tax payer to pay a tax assesses on him/her and it is illegal Read More
Tax avoidance
Tax avoidance refers to a situation where by a tax payer exploits the loopholes within the tax system to pay less or no tax at ... Read More
Instruments of commercial policy
Devaluation Import quotas Import duties Quality controls Licensing Administrative regulation Subsidies and tax incentives Read More
Commercial policy
Commercial policy refers to the deliberate government strategies to influence, control and direct the volume and value of both internal and foreign trade in an ... Read More
Examine the causes of imported inflation in your country.
Rising prices in international market High cost of transport Shortage of foreign exchange causes reduction in imports and scarcity of goods leads demand pull inflation ... Read More
Structural/bottleneck inflation meaning and causes
Structural inflation is where the persistent increase in the general price level arises out of supply rigidities in the economy which keep down the level ... Read More
Features of under development in LDC
Dominated by agriculture Low levels of income High population growth rate Low level of technology Existence of dualism Overdependence on external resource and trade High ... Read More
State any four structural features of your countries economy
Structural features of Uganda’s economy is Dominated by agriculture Poorly developed infrastructure Unemployment and under employment Labour forces predominantly unskilled and mostly employed in the ... Read More
Given GNP at factor cost, how would you derive GNP at market price
GDPFC = GNPFC – net factor income from abroad GDPMP = GNPFC + Net indirect taxes Read More
Advantages of partnership in your country
The members share risks and uncertainties More capital can be raised compared to sole proprietorship Easier to run and form compared to companies Enjoys privacy ... Read More
What is ‘Stocks’
A stock is a general term used to describe the ownership certificates of any company. A share, refers to the stock certificate of a particular ... Read More
Partnership
A partnership is an arrangement between two to 20 people to oversee business operations and share its profits and liabilities. Read More
Determinants of aggregate demand
General price levels Availability of money in circulation Size of the population Availability of commodities Taxation and subsidization policy The existing capital stock Level of ... Read More
Reasons for deliberate surplus budget
To reduce aggregate demand by withdrawing excess amount of money from circulation So that government uses surplus budget to improve on the balance of payment ... Read More
Why may government deliberately plan for an unbalanced budget?
Why may government deliberately plan for an unbalanced budget? Reasons for deliberate surplus budget planning To reduce aggregate demand by withdrawing excess amount of money ... Read More
What is meant by unbalanced budget
A government budget is said to be unbalanced if the estimated government receipts are not equal to the estimated government expenditure. Read More
Account for existence of decentralized planning in developing country or give advantages of decentralized planning
Reasons for/advantages of decentralized planning in developing country It involves local people in formulation and implementation of plans which is a key to developing economy. ... Read More
Disadvantages of decentralization
1. Uniform policies not followed: Under decentralization, it is not possible* to follow uniform policies and standardized procedures. Each administration will work and frame policies ... Read More
Centralized plannin
Centralized planning type of economic system in which decision-making process is done at a national level by specialized authority such as a National Planning Authority. Read More
Decentralized planning
Decentralized planning is a type of economic system in which decision-making process is distributed amongst various administrative regions/levels or localized within production agents Read More
Why may devaluation fail to achieve the objectives it is intended in an economy.
Price inelasticity of demand for imports making devaluation to lead to more capital outflow. Price inelasticity of demand for exports, i.e. devaluation has little benefits ... Read More
Currency depreciation
Currency depreciation is a fall in the value of a currency in terms of its exchange rate versus other currencies due to forces of demand and ... Read More
Currency devaluation
Devaluation is a deliberate/legal government policy to lower the value of the domestic currency in relation to foreign currencies. Read More
Why should developing countries industrialize?
Advantages of industrialization It increases the volume of goods and services that in turn increase human choice hence increases consumer sovereignty It increases a country’s ... Read More
Why may price indices be unreliable indicators of cost of living?
Unrepresentative results due a few places sampled which do not cover the whole country. It is difficult to assign weight to different because of differences ... Read More
Explain how price(cost of living) index are computed. Illustrate your answer.
Procedure taken Define the objectives of calculating the price index e.g. wage determination. Choose an area where the data is to be collected Get the ... Read More
Explain how an Oligopolistic firm maximizes profit in short run
The oligopolist maximizes profits where MC = MR, which results in an equilibrium output of Q units and an equilibrium price of P. The oligopolist ... Read More
Advantages of an oligopolistic market to consumers
High quality products due to competition Provision of efficient service Provision of prizes and gifts to consumers Prices charged are relatively stable Provision of after ... Read More
Features of an Oligopolistic market structure
Few firms/suppliers and many buyers existing in the market Homogeneous products (perfect oligopoly) and differentiated products (imperfect oligopoly) Price wars/cut throat competition Price leadership for ... Read More
What is taxable base?
A taxable base is a range of economic activities on which government levy taxes. They include the total amount of income, property, assets, consumption, transactions, ... Read More
What is meant by incidence tax?
A tax incidence refers to the final resting place of a tax i.e. the person or any entity that finally bears the burden of a tax. Read More
Perspective planning
Perspective planning is a long term government planning that sets its target to occur for long period of time over 10 years. Read More
A comprehensive planning
A comprehensive planning provides a vision for the future of the country along with the steps that are needed to make that vision a reality ... Read More
What is meant by “economic planning”
Economic planning is a deliberate government attempt or efforts to design measures that influence and control economic activities towards achieving economic goals in a given ... Read More
Merits/Advantages of floating exchange rate
It ensures that there is a favourable exchange rate in the foreign exchange market It controls actions of speculators Monetary authority can still maintain control ... Read More
Obstacles to success of barter trade in an economy
Perishability of some goods Bulkiness of items that make their transport difficult No standard value for measurement purpose Indivisibility of some commodities Limited credit transaction ... Read More
Distinguish between barter terms of trade and income terms of trade.
The most common is the net barter (or commodity) terms of trade index, or the ratio of the export price index to the import price index. ... Read More
What is income terms of trade
Income terms of trade (ITT) is is the ratio of value of exports to the price index of imports Read More
Policy measures to control/curb cost-push inflation in an economy
Subsidization policy i.e. subsidizing producers Reduction in bank interest rates Reduction in taxes Maximum price legislation Use of non-monetary reward/fringe benefits Wage control measures Read More
Disadvantages of under population
Limited market size Low labour supply Limited competitiveness, innovations and inventions Low tax revenue Read More
What is under population
Under population is a situation of having a lower density of population than is normal or desirable to achieve full potential of economical output. Read More
Given that a country’s national income is Ushs. 100millions, the marginal propensity to consume is 0.6. Calculate the country’s final level of income (2marks)
Multiplier = 1/(1-MPC) = 1/(1-0.6) = 1/0.4= 2.5 Final level of national income = initial income x multiplier = 2.5 x 100m = 250m Read More
Define the term marginal propensity to consume
Marginal Propensity to Consume(MPC) is the proportion of additional income that is spent on consumption. Or it is the ratio of change in consumption to change ... Read More
Advantages/merits of resale price maintenance
Protects consumers from exploitation Reduces competition between large scale and small scale retailer Increased producer’s sales and profits It controls price stability and inflation Read More
Explain the relationship between diminishing marginal utility and the demand curve
As marginal utility falls, demand also falls since consumers will be willing to consume additional units at successively lower prices Both have negative slope i.e. ... Read More
State the law of diminishing marginal utility
The law of diminishing marginal utility states that all else equal, as consumption increases, the marginal utility derived from each additional unit declines. Read More
What is the role of public finance in your country
It influences the level of investment. The government may reduce taxes and increase subsidies in a given sector to raise level of investment To reduce ... Read More
Define the term “public finance”.
Public finance is a branch of macro-economic which deals with the government income and expenditures to achieve national development. Read More
Examine the causes of (persistent) inflation in your country.
Rising prices in international market High cost of transport due to high cost of fuel Shortage of foreign exchange causes reduction in imports and scarcity ... Read More
Explain the Keynesian theory of unemployment
The Keynesian theory states that unemployment caused by a lack of aggregate demand in the economy Due to low demand for final products, firms reduce ... Read More
Account for the existing differences in wages in your country?/ account for wage differentials in your country.
Difference in talents (natural ability) those who are naturally talented e.g. footballers, musicians usually earn higher wages than their counterparts that are not talented. Differences ... Read More