UNIVERSITY OF NAIROBI

SCHOOL OF ECONOMICS

………………………………………………………………………………

CAT

INSTRUCTIONS: ANY TWO QUESTIONS

 

 

TIME: 1 Hour

 

QUESTION ONE

 

i)                   Explain the differences between positive and normative economics

ii)                Explain any two reasons why the gap between the rich and the poor is growing in Kenya

iii)              Briefly describe any two ways of increasing incomes for university students in Kenya today

 

QUESTION TWO

 

i)                   Explain what is meant by disposable income

ii)                Explain how disposable income determines demand for goods and services

iii)              How is disposable income useful to you in your future career?

 

QUESTION THREE

 

i)                   Explain the meaning of the production possibility frontier and how it is used in economic planning

ii)                Explain the difference between inferior goods and giffen goods

i)                   Explain any three differences between substitutes and complementary goods