MAASAI MARA UNIVERSITY
REGULAR UNIVERSITY EXAMINATIONS 2013/2014 ACADEMIC YEAR
SECOND YEAR FIRST SEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
BACHELOR OF ARTS IN ECONOMICS
COURSE CODE: ECO 323
COURSE TITLE: PUBLIC FINANCE AND FISCAL POLICY FINANCE
DATE:24TH APRIL 2014 TIME: 9.00AM – 12.00PM
INSTRUCTIONS TO CANDIDATES
Question ONE is compulsory
Answer any other TWO questions
QUESTION ONE
a) Explain using illustration and relevant examples, the following economic concepts as used in public finance:
(i) Social goods [3 marks]
(ii) Fiscal externalities [3 marks]
(iii) Optimum level of public goods [4 marks]
(iv) Merit goods [2 marks]
(v) Public debt [3 marks]
b) Citing Kenyan examples, discuss privatization mechanism [10 marks]
c) How is representative democracy theory used in fiscal decision to cater for voters interests in fiscal operations? [4marks]
QUESTION TWO
Using specific examples from less developed countries, explain the role of public enterprises in providing public commodities and promoting development. [20 marks]
QUESTION THREE
i) Explain why public debt is incurred by a country [8marks]
ii) Discuss what is tax incidence, is it different from tax shifting? [7marks]
iii) Explain with applicable example what a tax burden is. [5marks]
QUESTION FOUR
Using relevant examples enumerate on the various sources of Kenyan government funds, have these sources changed since independence? [20marks]
QUESTION FIVE
i) Explain five economic effects of public debt. [15marks]
ii) What is budget deficit? [5marks]
