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[email protected] University Examinations 2021/2022
THIRD YEAR FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR
OF SCIENCE IN ECONOMICS
BEC 3452: INTERNATIONAL ECONOMICS II
DATE: OCTOBER 2022 TIME: 2 HOURS
INSTRUCTIONS: Answer question one and any other two questions
QUESTION ONE (30 MARKS)
a) (i) State the International economic problems cited by economists (4 marks)
(ii)Outline the trade characteristics of developing nations (5 marks)
b) (i) Explain the argument that “access by developing countries to the markets of advanced
nations will not solve all of the developing countries’ problems (5 marks)
(ii) State and explain the three trade problems that developing nations face (6 marks)
c) Clearly explain the instruments of trade policy (10 marks)
QUESTION TWO (20 MARKS)
a) (i) Explain the concept “exchange rate” (2 marks)
(ii) Explain why exchange rates play a central role in international trade (4 marks)
b) (i) State the political arguments for free trade (8 marks)
(ii) Explain a foreign exchange market and how it operates (6 marks)
Meru University of Science & Technology is ISO 9001:2015 Certified
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QUESTION THREE (20 MARKS)
a) (i) Explain the “Balance of payments” (3 marks)
(ii) State and explain the accounts in the balance of payments structure (6 marks)
b) (i) Explain the term “International transaction” (2 marks)
(ii) State and explain the national welfare arguments against free trade (9 marks)
QUESTION FOUR (20 MARKS)
a) Explain (with examples) each of the following regional trading arrangements:
(i) A free trade area (3 marks)
(ii) A customs Union (3 marks)
(iii) A common market (3 marks)
b) (i) Differentiate between “technological change” and “technology transfer” (3 marks)
(ii) Explain how technology transfer is implemented (8 marks)
QUESTION FIVE (20 MARKS)
a) Explain the two main trade barriers used in international trade (10 marks)
b) Explain why the price elasticity of demand and supply is a key factor underlying the instability
of primary product prices and export receipts (10 marks)
Meru University of Science & Technology is ISO 9001:2015 Certified
Foundation of Innovations Page 2
