ECONOMICS
July 2019
THE KENYA NATIONAL EXAMINATIONS COUNCIL
DIPLOMA IN SECRETARIAL STUDIES
DIPLOMA IN SALES AND MARKETING
DIPLOMA IN SUPPLY CHAIN MANAGEMENT
DIPLOMA IN BUSINESS MANAGEMENT
DIPLOMA IN ROAD TRANSPORT MANAGEMENT
DIPLOMA IN CO-OPERATIVE MANAGEMENT
DIPLOMA IN INVESTMENT
DIPLOMA IN HUMAN RESOURCE MANAGEMENT
MODULE I
ECONOMICS
1. (a) Highlight five reasons that may make a controlled economic system undesirable by many countries. (10 marks)
(b) Explain the reasons that make perfect competition difficult to achieve in an economy. (10 marks)
2. (a) Outline five functions of an entrepreneur as a factor of production. (10 marks)
(b) National income statistics have been used to compare standards of living in different countries. Explain five limitations of using such statistics. (10 marks)
3. (a) Explain six measures that the government may take to control unemployment. (12 marks)
(b) Explain four differences between commercial banks and non-bank financial institutions. (8 marks)
4. (a) Increasing the size of an individual firm beyond a certain scale can lead to internal diseconomies of scale. Explain four sources of such diseconomies. (8 marks)
(b) Explain six factors that may influence the wages paid to employees in an organization. (12 marks)
5. (a) The Kenyan government has in the recent past decontrolled prices of some commodities. Explain the positive effects of such price decontrol. (8 marks)
(b) Explain six monetary measures that may be taken to reduce inflation in a country. (12 marks)
6. (a) Explain five reasons that may account for an outward shift in the demand curve. (10 marks)
(b) Certain principles should guide public expenditure. Explain five such principles. (10 marks)
7. ( a) Explain four grounds on which progressive tax may be justified. (8 marks)
(b) Explain six factors that determine the elasticity of supply. (12 marks)