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Bcom 333:Public Finance Question Paper

Bcom 333:Public Finance

Course:Bachelor Of Commerce

Institution: Chuka University question papers

Exam Year:2012

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CHUKA UNIVERSITY
COLLEGE
UNIVERSITY EXAMINATIONS
THIRD YEAR EXAMINATION FOR THE AWARD OF DEGREE OF
BACHELOR OF COMMERCE
BCOM 333: PUBLIC FINANCE
STREAMS: BCOM Y3 TIME: 2 HOURS
DAY/DATE: WEDNESDAY 13/12/2012 8.30 A.M – 10.30 A.M.
INSTRUCTIONS:
Answer questions 1 and 5 and any other two questions.
1. (a) There is generally a belief that the private sector is more efficient than the public
sector in providing goods and services in any economy. This in practice has led
to the popular and ongoing privatization of public sector enterprises across the
globe. However no country is willing to leave all the operations of their
economies in the hands of the private sector. With the help of appropriate
illustrations explain five justifications for continued government involvement in
the provision of goods and services in an economy. [10 marks]
(b) Particular tax or expenditure measures affect the economy in various ways and
may be designed to serve a variety of purposes.
(i) Explain the difference between fiscal policy and a fiscal objective.
[2 marks]
(ii) Discuss four functions played by the governments through public finance
explaining how the government goes about achieving those functions.
[8 marks]
2. (a) Define the following terms as used in public finance giving examples:
(i) Public goods [2 marks]
(ii) Private goods [2 marks]
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(b) With the help of a graphical illustration, clearly explain how equilibrium
is attained in:
(i) The provision of public goods [6 marks]
(ii) The provision of private goods [6 marks]
(c) Clearly explain the following aspects as relates to provision of public goods:
(i) Even though everyone consumes the same quantity of public goods, it
need not be valued equally by all. [1 mark]
(ii) Classification of a good as a public good is not absolute. [1 mark]
(iii) Private goods are not necessarily provided exclusively by the private
sector. [1 mark]
(iv) A commodity can satisfy one part of the definition of public good and not
the other. [1 mark]
3. (a) Fiscal policies are a common tool used by governments across the globe. Their
application has in various cases failed to yield the desired results. Discuss the
various challenges limiting the effectiveness of fiscal policies. [10 marks]
(b) Explain the following concepts as used in public finance using illustrations where
appropriate:
(i) Cost benefit analysis [2 marks]
(ii) Cost effectiveness analysis [2 marks]
(iii) Fiscal institutions in Kenya [2 marks]
(iv) Budget estimates [2 marks]
(v) Advalorem taxes [2 marks]
4. Compare and contrast the public finance management provisions under Kenya’s
2010 constitution visavis the old constitution provisions. [20 marks]
5. Write short notes on the following as used in public finance:
(i) Controller of budget [2 marks]
(ii) Revenue control [2 marks]
(iii) Monetary policy [2 marks]
(iv) Accounting officer [2 marks]
(v) Use of consolidated and PAC reports [2 marks]
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Bcom 333:Public Finance Question Paper

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