Public Finance (ECOM3104)
Faculty of Economics and Management Science (FEMS)
Semester: First Semester
Level: 300
Year: 2017
Part one (35 marks)
1) What is Public finance?
2) Justify the government intervention from an economic point of view.
3) After defining public goods, give and explain the specific characteristics of such goods.
4) State the first and second theorems of Welfare Economics
5) Differentiate efficiency from equity.
6) Why is it difficult to answer the perennial question of whether the government has grown too
large?
7) What is the challenge for policy design in Public Finance?
Part two (35 marks)
8) a) Explain the concept of externality with illustrations? (8marks)
b) Can externality be considered as public goods? Why? (4marks)
9) a) Imagine a tax system that requires a tax payer to pay: 5%, 10% and 20% of the first,
second and third 100,000FCFA respectively as taxes. Determine the Average Tax Rate (ATR)
and Marginal Tax Rate (MTR) of the tax system. Is the tax system regressive, progressive of
proportional? (6marks)
b) Distinguish between the Benefit and Ability to pay Principle of taxes. (4mrks)
10) State two reasons why politicians are likely to argue in favor of a VAT than a sales tax of
the same amount. (3 marks)
11) Study the following fixed budget size projects and assume that the government has 1,500
FCFA to spend:
project 1 2 3 4 5 6 7 8 9 10
Cost (FCFA) 200 150 250 300 450 500 125 350 650 500
Benefits 250 175 225 375 535 500 160 500 780 585
Which project should be selected for execution if the government uses;
a) The Net Benefit-cost ratio analysis ((5marks)
b) The Net Benefit analyses. (5marks)
THE UNIVERSITY OF BAMENDA
FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES
1
st
Semester Exam Course: Public Finance: ECON307
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