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PFN712S- PUBLIC FINANCE- 1ST OPP- JUNE 2023 |
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nAmI BIA un IVERS ITY
OF SCIEnCE Ano TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE: 07BECO
LEVEL: 7
COURSE CODE: PFN712S
COURSE NAME: PUBLICFINANCE
SESSION: JUNE 2023
DURATION: 3 HOURS
PAPER: THEORY
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S)
MR. MALLY LIKUKELA
MODERATOR:
MR. M MBAHA
INSTRUCTIONS
1. Answer ALL the questions.
2. Read all the questions carefully before answering.
3. Number the answers clearly
THIS QUESTION PAPER CONSISTS OF _S_ PAGES (Including this front page)
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A: [SECTION ,MU~TlplE•~H,QICE,r
•
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p
1. Operational Efficiency is
(a} States that agencies should provide goods and services at a cost that
achieves ongoing efficiency gains
(b} The budget system should facilitate reallocation from lesser to higher
priorities and from less to more effective programs
(c} is the ability of a firm to produce as much output as possible with a
specified level of inputs, given the existing technology.
(d} All of the above
2. A pure private good is
a} non rival in consumption and subject to exclusion.
b} rival in consumption and subject to exclusion.
c} rival in consumption and not subject to exclusion.
d} all of the above
3. Positive Economics is based on:
a} Statements that contain opinions and value judgement. i.e. "what ought
to be" or "what should be
b} based on factual statements and such statements contain no value
judgement
c} Statements that cannot be settled by science or by an appeal to and such
statement
d} All of the above
4. The economic incidence of a unit tax is
a. Generally borne by the buyers
b. Generally borne by sellers
c. Generally borne by the government
d. Independent of the statutory incidence for the tax
5. Market failure can occur when
(a} monopoly power exists in the market.
(b} markets are missing.
(c} consumers can influence prices.
(d} all of the above.
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6. Progressive tax
a) is when a taxpayer pay higher taxes if he earns more income and lower
taxes if he earns less
b) Is when low income individuals pay a higher percentage of their incomes
in taxes, than richer individuals
c) a tax in which the tax rate decreases as the taxable amount increases
d) All of the above
7. Pareto points in the Edgeworth Box are
a) Found when indifference curves are tangent.
b) Found when MRS are equal.
c) Found when one person cannot be made better off without making
another person worse off.
d) all of the above.
8. The slope of budget line is called
a) the diminishing marginal return
b) the marginal rate of substitution
c) the Marginal Rate of Transformation
d) the rate of marginal substitution
9. Movement from an inefficient allocation to an efficient allocation in the
Edgeworth Box will
a) Increase the utility of all individualsls what explain the law of demand
b) Increase the utility of at least one individual, but may decrease the level of
utility of another person.
c) Increase the utility of one individual, but cannot decrease the utility of any
individual
d) Decrease the utility of all individuals
10. Allocative efficiency
a) Tells us the relationship between the quantity allocated, and the price
b) Is about allocating resources such that the maximum utility is generated
c) Is the ability of a firm to produce as much output as possible with a
specified level of inputs, given the existing technology.
d) All of the above
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SECTIONB::rRUEOR FALS!:
10MARKS
1. The private sector and businesses are not involved at all in government
budgeting process because they don't receive money from state.
2. Market failure refer to situation where government intervene and make things
worse.
3. Transfer Payments are direct transfers in cash or in kind to poor individuals and
households.
4. Namibia has never run a Budget surplus since independence.
5. Allocative efficiency relates to output.
6. Citizens have a legal right to payments from the government regardless of
budget conditions.
7. Most externalities are negative, as the production process often entails
byproducts, waste, and other consequential outcomes that do not have further
benefits.
8. As long as the oil refinery company can pay the cost of pollution, it would be
inefficient for the oil refinery to stop producing oil.
9. The Office of the President provides overall oversight of the budget and
budgeting process in Namibia.
10. Marginal Rate of substitution implies that, as a consumer increases the amount
of Good X, he will be willing to forgo the equivalent amount of Good Y.
QUESTION 1
Define the following terms;
1. Pareto Efficiency
2. Tax reform
3. Technical efficiency
4. Externality
5. Budget Deficit
QUESTION 2
Define and explain the scope for Public Finance
[40MARKS~
10MARKS
[S MARKS]
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QUESTION 3
Describe the five solutions to the problem of externalities
[25MARKS]
- 2JOM'ARKS
QUESTION 1
[S MARKS]
Taxes are sometimes referred to as direct tax or indirect tax, distinguish between
Direct and indirect taxes (with appropriate examples).
QUESTION 2
Describe the main disadvantages of VAT.
[lOMARKS]
QUESTION 3
Explain the Basic Elements of Effective Government Budgeting
[lSMARKS]
QUESTION 4
[lOMARKS]
The tax table below indicate the amount of tax paid by individuals in four different
income categories:
Income
Income
Income
Income
10 000 %
20 000 %
40 000 %
60 000 %
Tax A 1000 10 2000 10 4000 10 6000 10
Tax B 800
8
1400 7
2600 6.5 3600 6
Tax C 400
4
1200 6
3000 7.5 5600 9.3
i.
Calculate the percentage tax paid (A, B & C) in each of the four different income
categories.
ii.
Indicate the types of tax (tax A, B & C) employed in this scenario.