ATTEMPT ALL QUESTIONS ON CONSUMPTION THEORY

1          What are the determinants of the level of investment in an economy under consumption theory.        (5MRKS)

2          Explain the different types of investment you know                                                                  (5MRKS)

3          Write short notes on the following

• Investment
• Gross investment
• Net investment                                                                                                                                    (3MRKS)

 4         List down any five determinants of the level of savings in an economy                                 (5MRKS)

5          Given that a rise in national income from 5200 million to $5280 million led to an increase in savings from $400 million to $420 million; Calculate;

• MPS
• MPC (5MRKS)

6         Given that a country’s national income is Shs 60,000 billion and its total consumption is Shs 48,000 billion;

calculate its APC.                                                                                                                              (5MRKS)

7        Given that a country’s Gross Domestic Product (GDP) increased from 100 million to 300 million and the value of imports increased from 25 million to 75 million.

Calculate the Marginal Propensity to Import.                                                                                     (5MRKS)

8      Given that; the current level of Gross Domestic Product is 300 million shillings, the increase in national investment expenditure is 50 million shillings and the marginal propensity to save is 0.2,

calculate the final level of national income.                                                                                      (5MRKS)

9      Given that the marginal propensity to consume (MPC) in an economy is 0.7 and there is a change in investment of shs 50 million, calculate the following;

• Investment multiplier:
• Final change in income in the economy:                                                                          (5MRKS)

10      Given that initial national income of a country is Shs 22 billion and that the MPS is 40%, calculate the final income in that country. (5MRKS)

11      Given that the marginal propensity to consume (MPC) in a two-sector economy is 80%, initial investment is Shs 20,000,000 million, initial equilibrium level of income is Shs 80,000,0000 million. If investment increased by Shs 5,000 million; Calculate;

• Multiplier value:
• New equilibrium level of income                                                                                   (5MRKS)

12     Given that a country’s national income is Uganda shillings 100 million; the marginal propensity to consume 0.6, calculate the country’s final level of income.                                                                                                                                       (5MRKS)