Technology Questions & Answers

1: Define the following ?

 Monetary policy : This is a deliberate move by the govt. through the central bank to
regulate and control the money supply in the economy Which my lead to demand pull
inflation
 Fiscal policy : These are measures taken by the government to influence the level of
demand in the economy through taxation process
2: state two Fiscal policies and two monetary policies taken by the government ?
 Fiscal policy:
1. Reduced govt. Spending
2. Increasing income taxes
 Monetary policy:
1. Increase rate of interest of lending to the Commercial banks
2. Increasing the commercial banks cash/liquidity ratio
3: Outline measure taken by the government to control the following inflations :
 Cost pull inflation
1. Reducing taxes on production
2. Subsidizing the production
3. Restricting import on raw materials
4. Employing the price control technique
 Demand pull inflation
1. Directives to the Commercial banks
2. Controlling exports
3. Increasing income taxes
4. Request to the Commercial banks
5. Reducing govt. Expenditure
4: Differentiate economic growth and economic development ?
 Economic growth :
1. An increase in size of the country’s national income
 Economic development :
2. Number of people leaving in absolute poverty does not increase
5: Name two reasons why economic planning is needed ?
1. Appropriate resource allocation
2. Project evaluation
6: what is international trade ?
 Is a trade involving the exchange of goods and
services b/w two or more countries

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7: Mention two advantages and two disadvantages of international trade ?
 Advantages :
1. It enable the country to get what it doesn’t produce
2. It helps in promoting peace among the trading countries
 Disadvantages :
1. May make the country to suffer from import inflation
2. May lead unfavorable balance of payment , if the import is higher than exports
8: what bring Difference in terms of trade b/w two countries ?
 Nature of commodity being exported
 Nature of commodity being imported
 Change In demand for a country’s export
9: what causes balance of payment disequilibrium ?
 Fall in volume of exports
 Restriction by trading partners
 Increasing in the volume of import
10: Name two ways in which balance of payment can be corrected ?
 Encouraging foreign investment in the country
 Decreasing the volume of import
11: what is the formula for terms of trade ?
 Terms of trade = Price index of export
Price index of import
12: what reduces level of consumers dispossible income ?
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