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Aec 307: Public Finance Question Paper

Aec 307: Public Finance

Course:Bachelor Of Arts

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
INSTITUTE OF OPEN LEARNING
EXAMINATION FOR THE DEGREE OF BACHELOR OF ARTS
AEC 307: PUBLIC FINANCE
DATE: Wednesday 9TH July, 2008

TIME: 1.00 – 3.00 p.m.
INSTRUCTIONS:
Answer question ONE and any other TWO questions.
Q. 1
(a)
Distinguish between the following concepts.

(i)
Public good and private good.

(2 marks)

(ii)
Exclusion and rivalry.

(2 marks)
(iii)
Public sector borrowing requirement and the public sector debt

repayment.

(2 marks)

(iv)
Ability to pay and equity.

(2 marks)
(b)
With the help of an educational project distinguish between
(i)
Direct or indirect benefits and costs.

(4 marks)
(ii)
Tangible or intangible benefits and costs.
(4 marks)
(iii)
Final or intermediate benefits and costs

(4 marks)
(iv)
Real or pecuniary benefits and cost.

(4 marks)

(c)
Explain the ways in which the ability to pay theory of taxation differ

from the theory of benefit. Highlight the problems that are encountered
in implementing each of these tax system.

(4 marks)
Q. 2
(a)
Explain why there is a need for a fiscal policy to stabilize an economy.

(b)
Show how fiscal policy can be used to achieve.

(i)
An expansionary effect.

(8 marks)

(ii)
For controlling the aggregate demand at a time of boom.

(8 marks)
Q. 3
(a)
Explain any five cannons of public expenditure.
(10 marks)

(b)
There has been a phenomenon increase in public expenditure over the
years. Explain the effects of increased government expenditure on an
economy.

(10 marks)
Q. 4
(a)
Define the term public debt.

(2 marks)

(b)
Explain the effects of increased government borrowing on an economy.

(8 marks)

(c)
Explain four types of debts in a country.

(5 marks)

(d)
Discuss the factors which determine the borrowing level of a country.

(5 marks)

.

2

Aec 307: Public Finance Question Paper

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