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Public Finance Question Paper

Public Finance

Course:Bachelor Of Arts In Economics

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
INSTITUTE OF OPEN LEARNING
SPECIAL/SUPPLEMENTARY EXAMINATION FOR THE
DEGREE OF BACHELOR OF ARTS
AEC 307: PUBLIC FINANCE
DATE: Monday 6th October, 2008

TIME: 10.00 a.m. – 12.00 noon

INSTRUCTIONS: Answer question 1 and any other two questions.

1.
(a)
Distinguish between the following terms:

(i)
Social good and social bad commodities.

(4 marks)

(ii)
Tax incidence and Tax effect.

(4 marks)

(iii)
Income tax and Sale tax

(4 marks)

(b)
Explain in details the two basic principles that distinguish public
and private goods, giving example in each case.

(4 marks)

(c)
State the six principles of public expenditure.

(6 marks)

(d)
State and explain any four factors that determines the public sector

debt requirements.

(8 marks)

2.
(a)
Taxation can be used to eliminate inflationary and unemployment
gaps in an economy. Explain how it can be used to eliminate
unemployment in an economy.

(10 marks)

(b)
Explain how fiscal policy can be used to bridge the gap between the
rich and poor in an economy.

(10 marks)

3.
Explain the three fiscal function of the government and give appropriate
policies that can be applied.

(20 marks)

2

4.
(a)
Define the term externality.

(20 marks)
(b)
Explain the various mechanism that can be applied to correct
positive and negative externalities.

(18 marks)

5.
(a)
Explain any five sources of market failure.

(10 marks)
(b)
Explain the factors that determine the taxable capacity of a country.

10 marks)

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Public Finance Question Paper

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