Explain why reduction of Government deficits has increasingly become an important issue in fiscal policy framework of developing countries Reduction of Government deficits has increasingly become an important issue in fiscal policy framework of developing countries because of some reasons Read More …
Month: November 2020
Main causes of budget deficits
What are the main causes of budget deficits? Budget deficit – the excess of government spending over revenue; the main causes of government budget deficits include: Commitment to social welfare programmes Demographic trends Fundamental macro economic shifts eg slower growth Read More …
Distinction between Gross National and Gross Domestic products
Distinguish between Gross National and Gross Domestic products and account for the lower values of the former in developing economies Gross Domestic Product (GDP) – the money value of all (final) goods and services produced within the country but excluding Read More …
Factors that a firm should consider while developing an advertising policy
A business firm should consider the following factors while developing an advertising policy Advertising elasticity of demand Cost of advertising Target group e.g. the youth, business community, professionals, etc. The appropriate time to advertise Means of advertising e.g. electronic or Read More …
Distinguish between implicit and explicit costs
Implicit Costs: These are costs of self-owned, self employed resources used a firm in the process of production (abstract costs) e.g. opportunity cost, individual managerial skills etc. Such costs are not fixed and it‟s the owner who evaluates them. Read More …
Sources of Monopoly power
State the main sources of monopoly powers Sources of Monopoly power Exclusive ownership and control of resources (factors of production) Patent rights e.g. beer brands like Tusker, soft drinks like Coca Cola etc. Natural monopoly which results from economies of Read More …
What limits the successful application of Monetary policy tools in developing countries
What limits the successful application of Monetary policy tools in developing countries In developing countries like Kenya, the open market operations (OMO) are not quite virtually effective in controlling money supply. The main reason for this is the less developed Read More …
Instruments of Monetary policy used to control and regulate money supply the Central Banking Authorities
Define the term Monetary Policy and discuss any four instruments of this policy used to control and regulate money supply the Central Banking Authorities Monetary policy refers to the manipulation of money supply, liquidity and interest rates in the Read More …
How and when is the concept of elasticity applied in economic policy decisions.
The concept of elasticity can be applied in economic policy decisions in the light of the following situations: Business pricing decisions: Revenue can be increased increasing prices where demand is inelastic; where demand is elastic, revenue could be increased Read More …
Effects of Currency depreciation on the National Income
If the currency of a country depreciates, what would likely happen to the National Income? Why? Depreciation of the currency of a country would increase the nominal value (monetary value) of National Income; since depreciation constitutes a reduction in the Read More …