Question 1

(a) (i) Define the term 'business wealth'. (1 mark)

(ii) Describe the characteristics of wealth. (4 marks)

(b) (i) Describe the circumstances under which economic growth may not

lead to economic development.

(8 marks)

(ii) Describe the characteristics of Rostow's 'age of high mass

consumption' stage of economic growth.

(7 marks)

(Total 20 marks)

Question 3

(a) Distinguish between:

(i) gross domestic product and gross national product. (2 marks)

(ii) disposable income and per capita income. (2 marks)

(b) Discuss the reasons why national income is measured in an economy.

(10marks)

(c) (i) State the quantity theory of money. (2 marks)

(ii) Given that in an economy the quantity of money is Shs 2 million, the

velocity of circulation is 60 times and the level of transactions is 500;

determine the general price level.

(4 marks)

(Total 20 marks)

Question 4

(a) Explain the importance of price elasticity of demand to the government of

Uganda.

(6 marks)

(b) Discuss the causes of poor terms of trade faced by Uganda.

(7 marks)

(c) Explain the importance of credit in the development of Uganda's economy.

(7 marks)

Question 5

(a) (i) Distinguish between partial planning and decentralised planning.

(2 marks)

(ii) Describe the advantages of partial planning in developing countries.

(8 marks)

(b) (i) Explain the causes of underemployment in an economy.

(5 marks)

(5 marks)

(Total 20 marks)

Question 6

(a) (i) Describe the assumptions of the production possibility frontier curve.

(5 marks)

(ii) Explain how the concept of opportunity cost aids decision making.

(5 marks)

(b) (i) Distinguish between a price setting firm and price taking firm.

(2 marks)

(ii) Explain the conditions under which a producer may fix a high price

for his product.