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    BEC 3357 Monetary Theory Practice

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    kassimmakoy05
    (1) The document appears to be exam instructions for a Monetary Theory and Practice course at Meru University of Science and Technology. (2) Students are instructed to answer one compulsory question and any two other questions from a choice of five questions. (3) The questions cover various topics in monetary theory including the classical and rational expectations theories of money, the functions of money and banks, monetary policy transmission mechanisms, and measures of money supply.

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    BEC 3357 Monetary Theory Practice

    Uploaded by

    kassimmakoy05
    8 views2 pages
    (1) The document appears to be exam instructions for a Monetary Theory and Practice course at Meru University of Science and Technology. (2) Students are instructed to answer one compulsory question and any two other questions from a choice of five questions. (3) The questions cover various topics in monetary theory including the classical and rational expectations theories of money, the functions of money and banks, monetary policy transmission mechanisms, and measures of money supply.

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    monetary theory

    Original Title

    BEC-3357-Monetary-Theory-Practice

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    (1) The document appears to be exam instructions for a Monetary Theory and Practice course at Meru University of Science and Technology. (2) Students are instructed to answer one compulsory question and any two other questions from a choice of five questions. (3) The questions cover various topics in monetary theory including the classical and rational expectations theories of money, the functions of money and banks, monetary policy transmission mechanisms, and measures of money supply.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    8 views2 pages

    BEC 3357 Monetary Theory Practice

    Uploaded by

    kassimmakoy05
    (1) The document appears to be exam instructions for a Monetary Theory and Practice course at Meru University of Science and Technology. (2) Students are instructed to answer one compulsory question and any two other questions from a choice of five questions. (3) The questions cover various topics in monetary theory including the classical and rational expectations theories of money, the functions of money and banks, monetary policy transmission mechanisms, and measures of money supply.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    MERU UNIVERSITY OF SCIENCE AND TECHNOLOGY

    P.O. Box 972-60200 – Meru-Kenya.


    Tel: +254 (0)799529958, +254 (0)799529959, +254 (0)712524293
    Website: www.must.ac.ke Email: [email protected]
    University Examinations 2019/2020

    THIRD YEAR, SECOND SEMESTER EXAMINATION FOR THE DEGREE OF


    BACHELOR OF ECONOMICS AND BACHELOR OF COOPERATIVE MANAGEMENT

    BEC 3357 – MONETARY THEORY & PRACTICE

    DATE: OCTOBER 2020 TIME: 2 HOURS

    INSTRUCTIONS: Answer question oe and any other two questions.

    QUESTION ONE (30 MARKS)

    a) Briefly explain the following monetary theories:


    (i) Classical theory (2 Marks)
    (ii) Rational expectations theory (2 Marks)
    b) (i) Clearly explain what economists mean by “money” (2 Marks)
    (ii) State and comment on the functions that money performs in an economy.(6 Marks)
    (iii) Explain what money consists of in most countries today. (4 Marks)
    c) (i) Explain how banks create money. (6 Marks)
    (ii) Outline the four economic functions of banks and explain every function (8 Marks)

    QUESTION TWO (20 MARKS)

    a) Explain the banking system in Kenya , highlighting the groups of institutions involved in
    its performance. (10 Marks)
    b) State the four types of assets a bank usually owns and provide a summary of each.
    (10 Marks)

    QUESTION THREE (20 MARKS)

    a) (i) Explain monetary policy. (2 Marks)

    Meru University of Science & Technology is ISO 9001:2015 Certified


    Foundation of Innovations Page 1
    (ii) State the principal aim of monetary policy and the role of the Central Bank of Kenya
    in maintaining economic stability. (6 Marks)
    b) (i) Explain the factors that influence the quantity of money that people choose to
    hold. (8 Marks)
    (ii) Explain the following monetary policy transmission mechanisms;
    • The Keynesian Version (2 Marks)
    • The monetarist version (2 Marks)

    QUESTION FOUR (20 MARKS)

    a) Explain the role of the Central Bank of Kenya as monetary authority. (6 Marks)
    b) (i) Using a suitable graphic illustration, explain the demand for money curve(5 Marks)
    (ii) State the factors that limit the quantity of deposits that banks can create.(9 Marks)

    QUESTION FIVE (20 MARKS)

    a) State the main measures of money and specify the elements of each. (10 Marks)
    b) (i) Explain what a bank does in order to achieve security for its depositors.(2 Marks)
    (ii) Explain each of the safeguard measures the bank employs in (i) above.(8 Marks)

    Meru University of Science & Technology is ISO 9001:2015 Certified


    Foundation of Innovations Page 2

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