Category: Economics
Synthesis of phenylethanoate or phenylacetate
By reacting phenol and acetic anhydride in presence of sodium hydroxide 2. By reacting phenol with ethanoic/acetic acid in acidic medium Read More
Explain how the consumer surplus and diminishing marginal utility related.
As the marginal utility diminishes consumer’s surplus also decreases because the consumer would be prepared to pay less for the additional commodities consumed. Read More
Give advantages of vertical and horizontal integration of firms
Firms enjoy economy of scales Merging firms reduce competition leading to low cost of production and high profits Improves managerial skills Widen capital base Sharing ... Read More
Distinguish between vertical and horizontal integration of firms.
Vertical integration is the merging or coming together of firms operating at different stages of production process within the same industry for example agricultural firm ... Read More
Explain why average total cost (ATC) curve of perfect competition firm is U-shaped in the in short run and long run
Explain why average total cost (ATC) curve of perfect competition firm is U-shaped in the short run In the short run, ATC curve is U-shaped ... Read More
Aggregate money demand in an open economy
Aggregate money demand in an open economy is the total amount of money required to finance consumption, investment, government spending and net external balance of ... Read More
What is aggregate money demand in e closed economy
Aggregate money demand in a closed economy refers to the total amount of money needed by households, firms and government for the purpose of consumption, ... Read More
Why is expenditure on education and health regarded as investment?
They have an opportunity cost They cost money Involve risk and uncertainties They involve time preference They increase society’s quality of life once acquired They ... Read More
What is meant by term investment?
An investment is the purchase of goods (e.g. capital goods, human capital (skills))that are not consumed today but are used in the future to generate ... Read More
State Irving Fisher’s Quantity theory of money.
Irving Fisher’s Quantity of theory of money states that the general price level of goods and services in an economy varies directly with the quantity ... Read More
Explain why an economy may adopt a dual exchange rate system.
To discourage the importation of harmful and luxurious goods. Making foreign exchange readily available to all categories of importers and investors Promoting investment in the ... Read More
What is meant by dual exchange rate?
A dual exchange rate system is where there are two exchange rates in an economy, one of which is favorable and meant for priority or ... Read More
Distinguish between sales tax and capital gains tax.
Sales tax is a tax imposed on total sales of business or A sales tax is a consumption tax imposed by the government on the sale of ... Read More
What is a turnover tax?
A turnover tax is tax imposed or levied on gross sale of a business in a given period, usually a year i.e. it is levied ... Read More
Distinguish between price control and price discrimination.
Price control is the act by which the government fixes prices of commodities with the aim of either protecting consumers (maximum price)or protecting the producer ... Read More
What are the necessary conditions if price is discrimination is to succeed?
Price discrimination is the process (practice) of selling the same commodity to different consumers at different prices by the same seller in a given period ... Read More
What are the salient features of monopolistic competition?
Large number of buyers and sellers Free entry and exist of firms Product differentiation or branding There are many suppliers of the different brands No ... Read More
Explain how price and output are determined under monopolistic competition in the short run and long run
Short run Short-run refers to that period in which a monopolist cannot change the fixed factors. However, the monopolist is free in determining price due ... Read More
Ceteris paribus in economics
Ceteris paribus is a Latin word meaning “other factors remaining equal or constant”. It is a term used to analyze the relationship between economic variables, ... Read More
Laissez faire in economics
Laissez faire is an economic principle where all economic activities are guided by market forces of demand and supply. The price system is allowed to ... Read More
What are steps being taken to minimize budget deficits in your country?
(i) increasing tax revenue through the following measures Increasing the tax base through industrialization and operation of value added tax (VAT). Reducing smuggling by harmonizing ... Read More
What is budget deficit?
A budget deficit occurs when expenses exceed revenue of a country Read More
Examine factors that limits success /the limitations of the monetary policy in your country (low developed country)
Unstable money multiplier; this makes it rather difficult to predict the amount of money in the circulation. This is due to inability to predict money ... Read More
Explain the various tools of monetary policy
Open market operation, this is the sale and purchase of government securities, bonds and treasury bills with the aim of regulating money in circulation. When ... Read More
Examine the factors that may encourage the formation of an economic union in Eastern Africa.
Interest in a wider market. Cooperating countries must be interest in widening market for their nationals Geographical accessibility. All member states should be geographically near ... Read More
What are the features/characteristics of an Economic Union
Free movement of goods and services Common policies on product regulation Common external polity and external tariff structure. Free movements of capital and factors of ... Read More
What problems trade unions face in your country?
Government interference: the government is the major employer but usually interferes with decision made by trade unions e.g. it may refuse to give high wages ... Read More
What are the functions of a Trade Union?
negotiate agreements with employers on pay and conditions discuss major changes to the workplace such as large scale redundancy discuss members' concerns with employers accompany ... Read More
Examine the limitations of import substitution strategy in your country.
Limited domestic market to sustain development of industries. Import substitution requires a lot of protection and subsidies rarely affordable by government. Lack of competition make ... Read More
Explain the difference between export promotion and import substitution strategies of industrial development.
Export promotion refers to government polity and strategies of expanding the volumes of output destined for export. Import substitution refers to establishment of industries to ... Read More
What are steps being taken to improve performance of agricultural sector?
Policy measures to improve agricultural sector in Uganda. Encourage diversification to increase on the farmer’s revenue. Governments provide high yield seeds and crossbreed animals to ... Read More
Account for poor performance of agricultural sector in your country
Unfavorable climatic factors. The unpredictable climate; draught and floods in Uganda lead to low output in agriculture Pest and disease to plants and animals lead ... Read More
Examine the factors which affect the level of aggregate demand in your country
The general price levels in the country: when the general price level s of goods and services are high, aggregate demand lowers and when the ... Read More
Distinguish between aggregate money demand and aggregate demand.
Aggregate money demand refers to the total sum of money demanded by the economy to finance its expenditure Aggregate demand refers to the total demand ... Read More
What is the economic relationship between cash ratio, bank deposits and credit creation?
A low cash ratio will have a small effect on bank deposit and therefore greater credit will be created whereas on the other hand, high ... Read More
Distinguish trade creation and trade diversion
Trade creation refers to a situation where as a result of economic integration, a country shifts the consumption of goods from high cost non-member countries ... Read More
Give two modes of paying workers in your country.
Piece rate system Time rate system Profit sharing system Sliding scale Bank system of paying Read More
Differentiate between nominal wage and real wage
Nominal wage refers to payment or reward for labour in monetary terms whereas real wage refers to the purchasing power of the nominal wage. It ... Read More
How has agricultural production been affected by the land tenure system in your country?
Land tenure system have affected agricultural productivity in the following ways Communal ownership of land has encouraged subsistence farming leading to low production. Has led ... Read More
Define the term land tenure system
Land tenure system refers to the right of ownership and use of land in a particular society. Read More
Give conditions necessary for the take-off stage
Arise in the rate of productive investment from over 10%-15% of national income The development of one or more leading manufacturing sectors with high rate ... Read More
What is meant by “take off stage” in economics?
Take –off stage is the third stage of Rostov’s economic growth model where a country attains a self-steady and self-sustained growth. Industrialization increases with workers ... Read More
What is meant by “take off stage” in economics?
Take –off stage is the third stage of Rostov’s economic growth model where a country attains a self-steady and self-sustained growth in which industrialization increases ... Read More
Distinguish between GDP at factor cost and GDP at market price
GDP at factor cost refers to the value of goods and services valued at what factor of production are paid in production process in a ... Read More
Distinguish between Gross National Product (GNP) and Gross Domestic Product (GDP)
Gross national product (GNP) refers to the money value of all final goods and services produced by nationals of a country (living within and abroad) ... Read More
State the conceptual and statistical problems of measuring national income in your country
(i) conceptual problems of measuring national income in your country Calculation of incomes: In underdeveloped countries, people are not specialized in a particular occupation. They ... Read More
Distinguish between internal diseconomies of scale and external diseconomies of scale
Internal diseconomies imply to all factors which raise the cost of production from within a particular firm as a result of expansion of its scale ... Read More
Distinguish between real economies scale and pecuniary economies of scale
Real economies of scale are benefits accruing to a firm operating on large scale in terms of saving on the quantity of inputs leading to ... Read More
With examples, distinguish between derived demand and composite demand.
Derived Demand is demand for a good or service that arises as a result of demand for another related good or service. For instance the ... Read More
Discuss the role of foreign commercial banks in economic development of your country.
Positive roles Provide employment opportunities to local people. Provide training and skilling in the banking sector. They are sources of government revenue through taxes They ... Read More
Limitations of the comparative advantage theory
Relying on comparative advantages can lead to depletion of countries’ resources. May promote unfair or poor working conditions elsewhere May lead to overdependence on other ... Read More
Under what circumstances are workers justified to demand for wage increase?
When there is rising cost of living to enable them cope When there is increased profitability of the firm to enable them to benefit. In ... Read More
Define the term collective bargain
The term collective bargaining refers to the negotiation of employment terms between an employer and a group of workers. Employees are normally represented by labour unions during collective ... Read More
To what extent is under development in the “third world” a result of external factors?
Brain drainage. Foreign economies often attract skilled man power that are highly required in developing countries High prices for petroleum products lead to high foreign ... Read More
What is meant by underdevelopment?
Underdevelopment refers to the low level of development characterized by low real per capita income, wide-spread poverty, lower level of literacy, low technology, low life expectancy ... Read More
Explain the economic problems that result over dependence on agriculture. Suggest solutions to the problems
Problems faced The agriculture sector yield low tax revenue since production is largely subsistence. Agricultural output especially in LDCs is of lower quality this give ... Read More
Why may a firm continue to operate even if it is incurring losses both in short run and long run?
When it a beginner firm expecting to grow. When it has hope of recovering it losses in future When the firm is a pilot project ... Read More
Explain the meaning of the following break-even point of a firm
Break- even point refers to the point where the firm is neither making economic profits nor incurring any loss but only earns normal profit where ... Read More
Explain the meaning of the following excess capacity of a firm
Excess capacity Occurs when a firm operates at less than optimum level. Excess capacity is measured by the difference between what the firm is producing ... Read More
Explain why price mechanisms may be interfered with
Ignorance of customers. When consumers are ignorant about the goods and services they need to be protected from misleading advertisement. Consumers may need to be ... Read More