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KENYA METHODIST UNIVERSITY

END OF 3RD TRIMESTER 2016 (PT) EXAMINATION

SCHOOL : BUSINESS AND ECONOMICS


DEPARTMENT : ACCOUNTING, FINANCE AND INVESTMENTS
UNIT CODE : ECON 346
UNIT TITLE : PUBLIC FINANCE AND POLICY
TIME : 2 HOURS

Instructions:
 Answer question one and any other two questions.

Question One
a) The parliamentary Accounts Committee (PAC), the Parliamentary
investments committee (PIC) and the Ethics and anti-corruption
commission (EACC) are handling serious cases bordering on flouting of
fiscal policy regulations and procurement procedures.
Giving living examples discuss the how the canons of public expenditure
have been violated in each case. (10mks)
b) Consistently the national budget presented every year shows an
increase in public expenditure . Citing relevant examples explain five
reasons for this trend..
(10mks)
c) Discuss Five main ways in which Governments participate in economic
activities in their economy (10Mks)

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Question Two
a) Zero based budgeting is advocated as the best method of budgeting
in public finance. Explain five advantages of this type of budgeting. (10mks )
b) Explain at least five macro-economic goals of our Kenyan government.
(10
marks)

Question Three
a) Discuss at least FIVE circumstances under which tax revenue would
not only be insufficient but also unreliable source some of revenue in a
county.
(10 Marks)
b) Discuss FIVE main operational differences between public finance and
private finance (10mks)

Question Four
Write short notes on the following (20 Mks)
a) Scope of public finance
b) Forward shifting an backward shifting to tax burden.
c) Impact of tax and the incidence of tax.
d) Deficit budget and what causes it

Question Five
a) Explain the advantages that indirect taxes have over direct taxes
(7mks)
b) Why would a government prefer progressive tax system to a
proportional tax system
(8mks)
c) Whyis the study of public finace important? Give FIVE
reasons(5mks)

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