You are given the following information about the commodity and Money markets of a closed economy without government intervention. The commodity market Consumption function: C = 50 + 2/5Y Investment function: I = 790 – 21r The Money Market Precautionary and Transactions demand for money MDT = 1/6 Y Speculative […]

(a) What does the term employer include for PAYE purposes? ( 4 marks) (b) J. Selina is an accountant with K Enterprises Ltd. Details of employment income for the year ended 31 December 2005 are as follows: Salary per month – Sh.250,000 (PAYE of Sh.84,600 per month). She contributes 5% […]

The National Metal Works Limited manufactures and retails door and window frames. The company recently dismissed their external auditors. The directors have approached your firm of accountants to act as their auditors and the directors have proposed a fee of KShs. 1, 000, 000 plus a bonus of 1% of […]

(a) Distinguish between input-output analysis and Markov analysis. (2 marks) (b) A miniature economy has three industries: motor vehicle, electricity and steel. These industries are interdependent., such that, the output of one industry is the input of another. The following table shows the input ratios of each industry. Output Input […]

a) Define Money and outline its major functions. (8 marks) b) Explain the various motives of holding money. (6 marks) c) What are the likely effects of an expansionary monetary policy in an economy. (6 marks)

Beta Glassworks Ltd. manufactures bottles for the beverage industry. The company specializes in producing bottles of three different capacities: 0.2 litre, 0.3 litre and 0.5 litre. The three types of bottles are made by two machines A and B. The number of hours required for each type of bottle on […]

The table below represents economic transactions for country XYZ in billions of shillings: Total output Intermediate purchases Agriculture 30 10 Manufacturing 70 45 Services 55 25 Required: i) Calculate the Gross National Product of this economy using the value added approach. (3 marks) ii) If depreciation and indirect taxes equal […]

Why is it important to estimate National Income of a Country? What difficulties do economists encounter while carrying out such a task particularly in developing countries?

Discuss the tax implications of the following independent transactions: (i) 16% VAT paid on a new factory building constructed on behalf of Wema Ltd. VAT of Sh.60,000 due on the invoice to Disaster Limited which has remained unsettled by them for 6 months. Transfer of a building worth Sh.5,000,000 from […]