Category: Economics
What is meant by price mechanism?
Price mechanism is a system under the free enterprise economy where resource allocation and prices are determined by the market forces of demand and supply. ... Read More
Give the problems facing parastatal organization or government enterprises
Bureaucracy Corruption and embezzlement of funds Political interference Poor management Inadequate funding High production cost Limited skills Read More
What are parastatal organization?
Parastatal organizations are state enterprises established by acts of Parliament to carry out specific activities on behalf of the government such as NewVision News paper, ... Read More
Distinguish between reserve requirement and marginal requirement policies of central bank
Reserve requirement refers to specific proportion of commercial bank deposits held by the central bank not allowed to lent and meant to cover possible withdraws ... Read More
Why do governments try to avoid deflation?
The problem with deflation is that often it can contribute to lower economic growth. This is because deflation increases the real value of debt – ... Read More
What is meant by a deflationary gap?
A deflationary gap is a situation where aggregate supply exceeds aggregate demand at full employment level. It is called deflationary because it leads to a ... Read More
Give examples of an ad valorem tax in Uganda
Value added tax (VAT) Import tax on vehicles and machinery property taxes on real estate Read More
Define the term ad valorem tax
Ad valorem tax is tax levied on a commodity basing on its value. Read More
Give factors that affect real income.
Real incomes are closely linked to market demands (market conditions), since they are an important factor that affects demand. These factors include The general price ... Read More
What is meant by real income
Real income refers to the measure of the purchasing power of a consumer’s money incomes. It is expressed in terms of goods and services that ... Read More
Why is education regarded as both a consumer good and an economic good?
It is regarded as consumer good because Education is an economic good since it satisfies human wants. It helps develop one’s mental abilities once attained ... Read More
Why may the income elasticity of demand for commodity be negative?
Inferior goods have a negative income elasticity of demand; as consumers' income rises, they buy fewer inferior goods. An inferior good is an economic term ... Read More
Define income elasticity of demand
Income elasticity of demand refers to the sensitivity of the quantity demanded for a certain good to a change in the real income of consumers who buy ... Read More
How does scarcity related to choice in economics?
Because scarcity involves working with limited resources to satisfy unlimited wants, people are often compelled to choose from different alternatives. Read More
What is meant by scarcity and choice in economics?
Scarcity is the situation in which people has limited resources to satisfy all their desires. Or scarcity occurs when the wants of people exceed available ... Read More
Explain how a national budget act as a distributive socio-economic instrument
Establishing and maintaining public good like roads, security and defense Maintenance of government enterprises Encouraging the private sector through lending, purchasing of shares and starting ... Read More
Explain how a national budget act as a regulatory instrument
It protects domestic industries from competition of dumped commodities Reduces income inequalities by taxing the rich more Restrict consumption of harmful commodities e.g. cigarettes They ... Read More
Show the major objectives of national budgets in Uganda
Creating and maintaining a high level of employment. This is done through reducing taxes and increasing government expenditure on various development projects Guides the government ... Read More
Discuss the factors that have enabled developed countries to benefit more from international trade than developing countries.
Economies of scale. Developed countries produce large quantities at low costs making their goods and services cheaper. Quality of goods. Use of modern machinery and ... Read More
Outline the factors that may the relationship between the levels of income, expenditure and employment.
Limited size of domestic and international market. Poor infrastructures such as roads, school and hospitals. Inflation Low level of entrepreneurship Political instability discourages investment High ... Read More
What is the relationship between the levels of income, expenditure and employment
When the level of income is high, it promotes or increases aggregate demand for consumption of goods and services thus high expenditure which encourages investment ... Read More
Achievement, success, failure, criticisms, of IMF
Achievements of IMF Establishment of a Monetary Reserve Fund: The Fund has played significant role to achieve the sizeable stock of the national currencies of ... Read More
State and explain the objective of International Monetary Fund (IMF)
To promote international monetary co-operation. To ensure balanced international trade. It increases international liquidity through the special drawing rights (SDRs) facility where each member has ... Read More
What factors determine the level of investment in your country?
The level of infrastructural development: well laid and developed social economic infrastructure encourages the level of investment is it is easier to transport raw materials ... Read More
Explain the difference between saving and investment.
Saving refers to part of disposable income which is kept aside for future use. Saving = disposable income – consumption Whereas investing money is the ... Read More
Under what circumstance may capital intensive techniques of production be employed despite the existence of surplus labour
Answer Note: this calls for advantages of capital intensive and disadvantages of labour intensive techniques of production Machines are easier to control the labour. Labour ... Read More
State two fiscal policies and monetary policies of debt management used in your country.
Fiscal policies of debt management include Surplus budget to create sinking fund Pay as you use method Exceptional financing Imposition of capital levy on the ... Read More
What is public debt management?
Debt management is a way to get public debt under control through financial planning and budgeting. The goal of a debt management plan is to use ... Read More
What effect would failure to raise foreign exchange have on development plan?
Government resort to borrowing so as to cater for development and recurrent expenditure creating foreign debts and dependence Failure to implement development plan Decline in ... Read More
Disadvantages of unplanned economy
Escalates market imperfections like consumer ignorance in the market It leads monopolies Escalates income inequality Leads to economic instabilities such as inflation, unemployment Regional imbalances ... Read More
Give advantages of progressive tax
A progressive tax involves a tax rate that increases (or progresses) as taxable income increases. It imposes a lower tax rate on low-income earners and a ... Read More
Define and give advantages and disadvantages of proportional taxes
A proportional tax (flat tax) is an income tax system that requires the same percentage of income from all taxpayers, regardless of their income. Advantages of ... Read More
What is meant by vent for surplus theory in economics?
Vent for surplus theory explains the view that the exploitation of idle domestic resources for export can lead to an increase in national income because ... Read More
State government objectives of development
Increase in the level of national income thereby increase standards of living To reduce income inequality and poverty or aims at equality of income distribution ... Read More
Briefly explain the liquidity preference theory
Liquidity preference is the desire by individuals or firm to prefer holding or keeping their assets or wealth in money or cash form. According to ... Read More
Using specific examples from your country distinguish between “footloose” and rooted industries.
A footloose industry is an industry which can be located anywhere. Proximity to the location of raw material is not required. A key industry is ... Read More
Consequences of an inflationary gap
The inflationary gap occurs when the relative rise in real GDP causes an economy to increase its consumption, leading prices to climb in the long run. ... Read More
How does government multiplier operate?
The multiplier effect occurs when an initial injection into the circular flow causes a bigger final increase in real national income. This injection of demand might ... Read More
What is government expenditure multiplier?
Government multiplier refers to the ratio of change in national income to a change in government spending. i.e. Government multiplier = / Read More
How is labour mobility and division of labour related?
The relationship between the two is that the higher the division of labour the lower the mobility and vice versa. Read More
Distinguish between mobility of labour and division of labour.
Mobility of labour refers to the ease with which labour can move from one job to another or activity to another or from one geographical ... Read More
How is devaluation of the currency supposed to cure an economy’s balance of payments current account deficit? Is it likely to succeed? Give reasons to support your answer.
Answer When the demand for export is price elastic such that a fall in their prices lead to greater increase in quantity demanded abroad and ... Read More
What measures can be used to curb imported inflation?
Measures to imported inflation Imported inflation is the Increase in prices of domestically produced goods and services due to increase in the prices of imported ... Read More
Account for the causes of demand-pull and cash-push inflation in your country
Answer Causes of demand-pull inflation Demand-pull inflation is when growing demand for goods or services meets insufficient supply, which drives prices higher or Rising prices ... Read More
Under what socio-economic conditions may economic growth lead to economic development in an economy?
When an increase in real per capita income is sustained for a long period of time When increase in national income is used to acquire ... Read More
What are remedies to Uganda’s (LDC) economic structure
The following are proposed remedies The large subsistence sector can be reduced by the following measures There is need to establish, provide and maintain adequate ... Read More
Give salient features of Uganda’s (LDC) economy.
Uganda’s economy is characterized by the following It is dominated by the agricultural sector (predominantly subsistence in nature). Majority of Uganda's population is employed in ... Read More
Does the level of National income give an accurate picture of the economic and social wellbeing of the population? Give reasons to support your answer?
Note: National income figures are not designed to assess welfare or the wellbeing of citizens. It was designed to measure production capacity and economic growth. ... Read More
Explain how National income is calculated
National income is calculated in the following ways; The income approach: the national income is measured by adding up the pre-tax income generated by the ... Read More
Why may inefficient firm continue production both in short run and long run
When the aim is to provide employment opportunities for the people other than profit maximization. In this case, as long as the desirable labour force ... Read More
What is meant by an inefficient firm in economic theory?
An inefficient firm is a firm that operate at high cost of production. Or it is a firm that may not be in position to ... Read More
Why is aggregate demand curve down sloping?
Note that different reasons account for down slopping of a demand curve (one product) and aggregate demand curves (many products) Three reasons cause the aggregate ... Read More
Explain and illustrate an aggregate demand curve
A demand curve is the locus of points showing total demand of finished goods and service produced in an economy by both households and firms ... Read More
Give differences between structural and frictional unemployment
Unemployment that is frictional is chosen, whereas that which is structural is typically forced. People who voluntarily quit their jobs and then don’t find new work right away usually fall ... Read More
Differentiate between revaluation and overvaluation of a currency
Answer Revaluation of a currency occurs when the value of a currency is increased relative to another currency in a fixed exchange rate regime whereas ... Read More
Distinguish between social wealth and social welfare. Give two examples in each.
Answer Social wealth refers to the physical assets or stock of goods owned by the public or society or local authority, e.g. schools, roads, public ... Read More
What is meant by international cartels?. Give one example of an international cartel.
Answer International cartel refers to a group of firms from different countries coming together to coordinate output decisions and control prices in order to benefit ... Read More
Explain why leisure is an economic good.
Answer It is defined as rest, idleness, play, or recreation thereby regulating the body and mind, alleviating the stress of life, and providing a ... Read More
Distinguish between substitution effect and income effect
Answer The substitution effect states that when the price of a good decreases, consumers will substitute away from goods that are relatively more expensive to ... Read More
What is the role/importance/uses of price in a free market?
Answer Price is the amount of money that has to be paid to acquire a given product: Price acts as a signal for shortages and surpluses which help ... Read More