NATIONAL OPEN UNIVERSITY OF NIGERIA

DEPARTMENT OF ECONOMICS
FACULTY OF SOCIAL SCIENCES
2018_2 EXAMINATION

COURSE TITLE: MACROECONOMIC THEORY I

COURSE CODE: ECO 341
UNITS: 3
TIME ALLOWED: 3 HOURS
INSTRUCTIONS: ANSWER ANY FOUR (4) QUESTIONS. ALL QUESTIONS CARRY
EQUAL MARKS

1. Discuss the following concepts 3.5 Marks each

 Continuous Variable
 Discrete Variable
 Independent Variables
 Exogenous Variables
 Endogenous Variables

2a. Define the term Multiplier 2.5 Marks

2b. Given that Ye = a – bTo + Io + Go
1 - b + bt
Using the quotient rule, determine:

i. The Investment multiplier 7.5 Marks

ii. The Tax multiplier 7.5 Marks

Show your workings

3. List and discuss 5 factors affecting the inducement to invest 3.5 Marks each

1
4. Discuss the following concepts

i. National Income
ii. Gross Domestic Product
iii. Gross National Product
iv. Economic Recession
v. Real Income
vi. Equilibrium
vii. Leakages 2.5 Marks each

5a. Calculate the National Income Equilibrium Ye, given the following below
C = a + bYd

Yd = Y – T

T = To + tY

I = Io + rY

G = Go +gY

Show your workings 7.5 Marks

5b. List and explain the Rostow stages of growth 10 Marks

6a. Explain the following

a) The classical theory of interest rate 4 Marks
b) The loanable fund theory of interest rate 6 Marks

6b. i. What do you understand by the term investment? 5 Marks

ii. Prove mathematically that savings equal investment 2.5 Marks