Category: Economics
Differentiate between a national debt and public debt.
A national debt is a debt owed by the central government both to its nationals and foreigners excluding that incurred by local authorities. A Public ... Read More
Roles/functions of commercial banks
Role of Commercial Baking in Promoting Savings among People by allowing access to credit to those with savings and offering interest to savings They aid ... Read More
Functions/roles of central banks
Currency regulator or bank of issue Bank to the government Custodian of Cash reserves Custodian of International currency Lender of last resort Clearing house for ... Read More
Distinguish between assets and liabilities of commercial banks.
Assets of a commercial bank are possessions of the bank plus claims on other institutions and claims on its clients, they include Cash in hand- ... Read More
To what extent is inflation in your country a result of increased costs of production? or Causes of Cost-Push Inflation
In Uganda the following conditions increase the cost of production High wages and salaries Increasing prices of factor inputs such as cost of raw material ... Read More
What is an inflationary spiral?
Inflationary spiral is a situation that occurs during persistent inflation; which causes prices to constantly increase, that forces trade unions to keep demanding for higher ... Read More
To what extent is the Keynesian theory of unemployment applicable to the economies of the developing countries?
Keynes argued that inadequate overall demand could lead to prolonged periods of high unemployment. To a greater extent, this theory is irrelevant to developing countries because ... Read More
Distinguish between unemployment and under employment
Unemployment is a situation where a person is able and willing to work at an acceptable wage rate but cannot find a job. Under employment ... Read More
Role of industrialization in an economy
Positive roles/advantages/benefits/merits /need for industrialization in less developed countries Creates jobs in the country Promotes innovation, and technological advancement Leads development of infrastructures such as ... Read More
Examine the structure of industrial sector in your country/LDCs.
In Uganda; Most industries process primary products , a few engage in the manufacturing and assembling parts e.g. Spear motors and BATA shoe firms Most ... Read More
Advantages/merits of unbalanced growth strategy
Definition Unbalanced growth strategy is a strategy that recommends investment in one or few vital sectors of economy. Advantages More Practical and realistic: The unbalanced ... Read More
Advantages/merits of balanced growth strategy
Definition Balanced growth is the strategy that stresses simultaneous and coordinated development of all sectors of the economy so that they complement each other and ... Read More
What are the demerits/disadvantages of income inequality?
Rural-urban migration in search of better pay. Worsen dependency burden: majority of the poor depend on the rich for sustenance. Limits domestic market; a situation ... Read More
Advantages of income inequality
It promotes individual initiative and hard work in bid for the poor to earn a living. Entrepreneurs require rewards. Inequality is necessary to encourage entrepreneurs ... Read More
Examine the reasons for or causes of income inequality/differences in wages in your country
Causes of income inequality in Uganda Difference in talents (natural ability) those who are naturally talented e.g. footballers, musicians usually earn higher incomes than their ... Read More
Reasons for nationalization of firms
1. For strategic reasons: This is usually the case when there is war or when the government is trying to regulate the economy. Take for ... Read More
Disadvantages of Nationalization
1. Low productivity and inefficiency: Due to the fact that government businesses are usually poorly managed, most nationalized businesses by the government end up being ... Read More
Advantages of Nationalization
1. It helps to check exploitation: Just like I have discussed before, Nationalization of helps to stop exploitation by foreign and private businesses in the ... Read More
Distinguish between taxable capacity and incidence of tax
Taxable capacity refers to the ability of the tax payer to pay the tax assessed to him and remain with enough disposable income to enable ... Read More
Distinguish between specific tax and an ad valorem tax
A specific tax is a tax levied on each unit of a commodity produced e.g. 50/+ on each bar of soap while ad valorem tax ... Read More
Partial plan and comprehensive plan
Partial plan is a plan drawn and sets its targets to cover only part of the economy e.g. agriculture only, industry only, etc. Comprehensive ... Read More
Distinguish between macro-planning and project planning
Macro planning refers to planning by central authority for the economy as a whole which can be short term, medium term or long term. Project ... Read More
Net national income
Net national income (NNI) is defined as gross national income minus the depreciation of fixed capital assets (dwellings, buildings, machinery, transport equipment and physical infrastructure) through wear ... Read More
Differentiate between transfer earnings and economic rent in relation to land as a factor of production
Transfer earning in relation to land are the rewards to land that is enough to keep it in its present use. Economic rent of land ... Read More
Monopoly and monopolistic competition
Monopoly refers to a market structure where there is a single seller/producer of a product which does not have close substitutes e.g. Uganda National Examination ... Read More
Pure competition and perfect competition
Pure competition is a marketing situation characterized by Large number of buyers and sellers All firms sell an identical product (the product is a commodity or ... Read More
Main features of free trade
Profit maximization Consumer sovereignty Limited government intervention There is private ownership of property Freedom of choice and enterprise. Read More
Factors that lead to change in demand or factors that determine demand
Income: How much consumers have to spend. Consumer preferences: What types of products are popular at any given moment. Buyer expectations/speculation: Does the consumer expect ... Read More
Differentiate between a change in quantity demanded and change in demand.
A change in quantity demanded refers to a change in the specific quantity of a product that buyers are willing and able to buy due to ... Read More
Explain why it may be necessary to levy different taxes in an economy?/purpose of taxation/roles of taxation
To raise revenue by exploiting all potential taxable avenues base To protect domestic industries for cheap imports To reduce income inequality by taxing the rich ... Read More
Characteristic/features of a good tax system
Affordability. A good tax system should be affordable by the tax payer. Equity/fairness. A good tax system aims at equitable distribution of income through the ... Read More
Solution to problems of unemployment?
Ensuring political stability and crime reduction; encourages investment and job creation. Improvement of infrastructure; several roads are being constructed and renovated to encourage investment and ... Read More
Examine the causes of unemployment in your country
Technological progress and increased use of capital intensive methods such as computers replace labour force and lead to unemployment Changes in season: seasonal variations in ... Read More
Examine the factors limiting credit creation in your country.
Lack of Cash: The total amount of cash, available to the banking system limits the volume of credit that can be create Many people have ... Read More
Define the term stagflation.
Stagflation refers to economic stagnation associated with a high unemployment rate accompanied by high inflation. It could be due to laying off of workers and ... Read More
Account for differences in wages in your country.
Variation in levels of skills; skilled employees are paid more than unskilled employees Differences in bargaining power of an individual; individual with high bargaining power ... Read More
Examine the economic factors that make merging of firms difficult.
Fear of loss of their names and identity; building a business takes quite some time, so firms fear to enter entering ventures leading to loss ... Read More
Demerits/Disadvantages of floating the currency in economy
It leads to uncertainty in forex market It encourages speculation It leads to inflations It leads to fluctuation of foreign exchange earnings. Lack of Investment: ... Read More
Differentiate between managed/floating exchange rate and pegged/fixed exchange rates.
A pegged rate, or fixed exchange rate, is determined by the central bank of the country while Flexible ,managed or floating exchange rate is is where the ... Read More
Ways of correcting a balance of payments deficit
External borrowing Devaluation and exchange depreciation; Devaluation raises the domestic price of imports and reduces the foreign price of exports of a country devaluing its ... Read More
Disadvantages/demerits of economic integration
Loss of sovereignty; Members of economic unions typically are required to adhere to rules on trade, monetary policy, and fiscal policies established by an unelected ... Read More
Reasons for formation of/Advantages/benefits of Economic/regional Integration
Production on scale leads a reduction in the cost of production and reduced inflation Leads to increase in product availability and customers’ choice. market expansion and ... Read More
Free trade area
A free trade area is a region in which a number of countries have signed a free trade agreement and maintain little or no barriers to ... Read More
Distinguish between “free trade area” and common market.
A free trade area is a region in which a number of countries have signed a free trade agreement and maintain little or no barriers to ... Read More
Methods that may be used by a trade union to settle disputes
Collective bargaining Boycott of work; to refuse take part in an activity as a way of expressing strong disapproval Seminars Strike Picketing; an activity in ... Read More
Disadvantages of agricultural mechanization in developing countries
It creates technological unemployment It promotes rural-urban migration amongst the unemployed Cause income inequality It leads unbalances regional development It requires skilled and semi-skilled labour ... Read More
Give reasons why economic growth may not necessarily be accompanied by economic development.
When there is uneven income distribution existing in the country When there is high unemployment level When there is no improvements in the quality of ... Read More
State four ways in which your economy is economically dependent.
Foreign capital dependence Trade dependence Technological dependence Manpower dependence Ideological dependence Sectoral dependence Direct dependence Read More
What is multiplier concept?
A multiplier is simply a factor that amplifies or increase the base value of something else. A multiplier of 2x, for instance, would double the base figure. A ... Read More
What is meant accelerator principle?
This explains the relationship between consumption and investment. It states that any change in consumption spending leads to a change in investment spending. Therefore; investments ... Read More
Relate the level of profits earned in an economy to innovation
High profits enhance innovations and increase innovations lead to high profits Some of the key practical benefits of innovation are: improved productivity. reduced costs. increased ... Read More
Relate the level of profits earned in an economy to risks
The greater the risk, the higher the potential for profit or loss. In other words risky ventures tend to be more profitable Read More
Account for the existence of centralized planning in developing countries.
Focused and unified development vision Clear chains of command because everyone knows who to report to. Ease mobilization of development funds from donors and development ... Read More
Distinguish between project planning and micro-planning
Project planning is a discipline addressing how to complete a project in a certain timeframe, usually with defined stages and designated resources. One view of project ... Read More
What is micro project planning?
Micro planning is a task management approach that breaks down projects into small, manageable steps. This can be an effective way to improve productivity and focus, ... Read More
Why may the use of devaluation polity to improve the balance of payments in an economy fail?
When other countries affected by devaluation retaliate and nullify the effect. When the supply of export commodities in the devaluating country is inelastic, this lead ... Read More
what is meant by Balance of payment
Balance of payment is the difference between country's foreign exchange expenditure and its foreign exchange earnings in a given period of time usually a year. ... Read More
What is meant by Balance of trade
Balance of trade (BOT) is the difference between the value of a country's exports and the value of a country's imports for a given period. A country ... Read More
What is consumer price index?
Consumer price index is the measure of the relative changes in retail prices of basic needs from the base year to another given year. Or ... Read More
Examine the relevance of the Malthusian theory to developing countries.
The theory suggested some measures to population growth such as family planning late marriage which are being implemented in Uganda LDCs are concerned about the ... Read More