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QUESTION 3

a) Brieftly differentiate between microeconomics and macroeconomics.


- Microeconomics is the branch of economics that examines the behavior,
choice or functions of individual units of economy. For example the price
of petrol affect the demands for compressed natural gas.
-

Macroeconomics is the study of aggregate economic activity. It looks at


the overall performance of the economy and how each sector relates to
one another. For example of the areas are General Price Level,Economic
Growth, Standard of Living and International Trade.

b) Discuss the following macroeconomics objective :


i)Full employment
- Full employment means those who are willing and able to work are working
and can find a suitable job. The objective is low unemployment and high
productivity.
ii)Price stability (or control inflation)
- The inflation is not good for members of the society. Inflation which is a
continuous increase of the price and services will reduces the value of money
or the purchasing power of money. The objective is to keep inflation low and
stable value of money.
c) Discuss how fiscal policy can be used to achieve the above macroeconomics
- Fiscal policy is a policy to influence the performance of the economy by
using and for regulating the aggregate level of economic activities.This
can achieve macroeconomics as it is the study of how the whole economy
works. There are various economic goals that fiscal policy can get such as
full unemployment, price stability and economic growth.
QUESTION 4
a) Explain any two (2) tools of trade protectionism
Two tools of trade protectionism are tariffs and quotas. Tariffs are the most
popular measures used to discourage trade. A tarif is an excise tax imposed by the
goverment on imported goods.They are imposed to obtain revenue or to protect
domestic firms.While quota is the maximum amount of a commodity that can be
imported in given period.

b) Discuss four (4) reasons why the goverment implements trade protectionism
Protectionism is the goverments use of certain trade barriers such as tariffs and
import quotas in order to protect domestic producers from foreign competition.
Following discussiona are reasons why the goverment implements trade
protectionism.
Firstly, to protect infant industries. Those industries that cannot compete with
foreign producers. For example,Protons car.. Secondly, to prevent dumping. This
is because some countries involve in international trade to dump their excessive
output.Thirdly, to protect domestic employment. Unemployment may rise if a
country depends too much on imported good. Finally, industrial diversification.
This is to increase number of important sectors in the economy and reduce
dependent on imported product.
c) Explain four benefits of international trade to a nation
International trade enables countries to specialize in production of goods.There are
four benefits of international trade to a nation.
The first one is larger market. Through international trade, the market for product
or services are no longer confined to home market. Apart from domestic market, the
firms can also sells the product to all over the world. The second one is increase
competition. International trade increase competition and also promotes efficiency
in production. To survive competition, producers will have to ensure that they
produce high quality products at the lowest.at the lowest possible production costs.
The third one is it can be economic growth. Economic growth will increase the
income of people which in turn reduces the poverty rates in countries through
imports and foreign direct investment (FDI) inflows. Lastly, promote beneficial
relationship among countries. This will enhance cooperation, integration,
support and assistance among countries. It also can minimize political differences
and create more stable business in the world.