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Building Economics Questions Solved

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6 views

Building Economics Questions Solved

Uploaded by

Vincent Joseph
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. Explain four factors affecting changes in construction demand.

* Economic Growth: A growing economy generally leads to increased investment in


infrastructure, housing, and commercial buildings, driving up construction demand. Conversely,
economic downturns reduce demand.

* Interest Rates: Lower interest rates make borrowing cheaper, encouraging investment in
construction projects. Higher interest rates have the opposite effect, making projects more
expensive and reducing demand.

* Government Policies: Government spending on infrastructure, tax incentives for construction,


and regulations related to land use and building codes can significantly impact construction
demand.

* Population Growth and Demographics: Increasing population and changing demographics


(e.g., urbanization, aging population) create demand for new housing, schools, hospitals, and
other facilities.

2. Explain three measures to be applied in stabilizing prices in the market.

* Monetary Policy: Central banks can adjust interest rates and the money supply to control
inflation. Raising interest rates can reduce borrowing and spending, cooling down an overheated
economy and stabilizing prices.

* Fiscal Policy: Governments can use taxation and spending policies to influence aggregate
demand. Increasing taxes or reducing government spending can help reduce inflationary
pressures.

* Supply-Side Policies: Measures to increase the efficiency and productivity of the economy,
such as investing in education, infrastructure, and technology, can help increase supply and
stabilize prices.

3. Outline four functions of money.

* Medium of Exchange: Money facilitates transactions by acting as a widely accepted means of


payment for goods and services.

* Unit of Account: Money provides a common measure of value, allowing for comparison of the
relative worth of different goods and services.

* Store of Value: Money can be saved and used for future purchases, preserving its value over
time (although inflation can erode its purchasing power).

* Standard of Deferred Payment: Money enables borrowing and lending, allowing for
transactions to be settled at a later date.
4. Outline four roles of the Central Bank of Kenya.

* Issuing Currency: The Central Bank has the sole right to issue Kenyan currency (banknotes
and coins).

* Maintaining Price Stability: The Central Bank uses monetary policy tools to control inflation
and maintain price stability.

* Supervising the Banking Sector: The Central Bank regulates and supervises commercial banks
and other financial institutions to ensure the stability and soundness of the financial system.

* Acting as Banker to the Government: The Central Bank provides banking services to the
government, including managing government accounts and debt.

5. Explain four methods of controlling inflation.

* Increasing Interest Rates: This reduces borrowing and spending, decreasing aggregate demand
and slowing down the economy.

* Reducing Government Spending: This decreases aggregate demand and reduces inflationary
pressures.

* Increasing Taxes: This reduces disposable income, decreasing consumer spending and
aggregate demand.

* Controlling the Money Supply: By reducing the amount of money in circulation, the Central
Bank can curb inflationary pressures.

6. Explain four design variables which have cost implications to a project.

* Material Selection: The type and quality of materials chosen can significantly impact project
costs. More expensive, high-quality materials will increase costs, while cheaper alternatives may
reduce costs but potentially compromise quality.

* Building Size and Shape: Larger and more complex building designs generally require more
materials, labor, and time, leading to higher costs.

* Building Systems: The choice of building systems, such as HVAC, electrical, and plumbing,
can affect costs. More sophisticated and energy-efficient systems may have higher upfront costs
but lower operating costs.

* Site Conditions: The topography, soil conditions, and accessibility of the site can influence
construction costs. Difficult site conditions may require additional site preparation and
foundation work.

7. Differentiate between each of the following terms applied in building economics:


(i) Monopoly and Oligopoly

* Monopoly: A market structure where there is a single seller dominating the market, with no
close substitutes for their product or service.

* Oligopoly: A market structure where a few large firms dominate the market, with each firm
having a significant market share. They often engage in strategic pricing and competition.

(ii) Financial Budget and Operational Budget

* Financial Budget: A plan that outlines the sources and uses of funds for a project or
organization, including projected revenues, expenses, and cash flows.

* Operational Budget: A plan that outlines the day-to-day expenses and revenues associated
with running a specific department or activity within an organization.

(iii) Microeconomics and Macroeconomics

* Microeconomics: The study of individual economic agents (e.g., households, firms) and their
behavior in specific markets.

* Macroeconomics: The study of the economy as a whole, including aggregate variables such as
inflation, unemployment, and economic growth.

8. Describe four methods of valuing landed property.

* Sales Comparison Approach: This method involves comparing the subject property to similar
properties that have recently been sold in the same area.

* Cost Approach: This method involves estimating the cost of replacing the existing
improvements on the land, less depreciation, and adding the value of the land.

* Income Approach: This method involves estimating the present value of the future income that
the property is expected to generate.

* Residual Land Value Method: This method is used when the land is intended for development.
It estimates the value of the land based on the projected value of the completed development,
less all development costs.

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