Question 1

(a) Account for the downward sloping nature of the demand curve.

(4 marks)

(b) (i) Distinguish between the costs and benefits of economic growth.

(2 marks)

(ii) Describe any three costs and three benefits of economic growth.

(6 marks)

(c) Explain the causes of poor performance of the agricultural sector in

Uganda.

(8 marks)

(Total 20 marks)

Question 3

(a) (i) Explain what is meant by the term 'mobility of a factor'.

(1 mark)

(ii) Discuss the factors that limit mobility of labour in Uganda.

(7 marks)

(b) With the aid of an illustration, explain how a monopolistically competitive

firm determines price, output and profits in the long run.

(6 marks)

(c) (i) Distinguish between marginal rate of taxation and average rate of

taxation.

(2 marks)

(ii) Babo's income increased from Shs 120,000 per month to Shs

200,000 per month and her tax liability increased from Shs 20,000

to Shs 60,000.

Required:

Determine the marginal rate of taxation for Babo.

(4 marks)

(Total 20 marks)

Question 4

(a) (i) Distinguish between multiplier and accelerator principles in

economics.

(2 marks)

(ii) Given marginal propensity to consume of 0.8 and change in

investment expenditure of Shs 50 million; calculate the multiplier

magnitude and the change in the level of national income.

(4 marks)

(b) Discuss the factors which determine the level of investment expenditure in

an economy.

(7 marks)

(c) Explain the negative effects of unemployment on the development of

Uganda.

(7 marks)

(Total 20 marks)

Question 5

(a) (i) Explain the reasons advanced by trade unions to demand for higher

wages for their members.

(6 marks)

(ii) Discuss the problems facing trade unions in developing countries.

(6 marks)

(b) (i) Explain the factors that determine the exchange rate of a currency

in the money market.

(4marks)

(ii) Discuss the problems that Uganda is likely to meet as a member of

the East African community.

(4 marks)

(Total 20 marks)

Question 6

(a) Define the term 'interest rate' and explain its determinants in an economy.

(8 marks)

(b) Account for the poor performance of capital markets in developing

countries.

(5 marks)

(c) Explain the advantages of partial planning to Uganda.

(7 marks)