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PFN712S- PUBLIC FINANCE- 1ST OPP-JUNE2025 |
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n Am I BI A u n IVER s I TY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE: 07BECO
LEVEL: 7
COURSE CODE: PFN712S
SESSION: JUNE 2025
DURATION: 3 HOURS
COURSE NAME: PUBLIC FINANCE
PAPER: THEORY
MARKS: 100
FIRST OPPORTUNITY EXAMINATION_QUESTION PAPER
EXAMINER(S)
MR. MALLY LIKUKELA
MODERATOR:
MS NAEMI SHIDHUDHU
INSTRUCTIONS
1. This paper consists of 4 sections A, B, C and D
2. Answer ALL questions.
3. Number your answers in accordance with the question paper.
4. Start each section answer on a new page.
5. Write clearly and legibly
PERMISSIBLE MATERIALS
1. Pen, pencil and eraser
2. Ruler
3. Calculator
THIS EXAMINATION QUESTION PAPER CONSISTS OF 5 PAGES (Including this front page)
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SECTION A: MULTIPLE CHOICE
[20 MARKS]
1. If interest payments are subtracted from grossfiscal deficit, the remainder will be [2]
A. revenue deficit
B. gross primary deficit
C. capital deficit
D. Interest deficit
2. Which one of the following is a means of coping with a negative externality?
[2]
A. emission subsidies
B. Pigouviantaxes
C. vouchers
D. patents
3. The burden of direct taxes is borne by:
[2]
A. on whom it is levied
B. none of these
C. poor person
D. Rich person
4. A pure private good is:
[2]
A. All choices are correct.
B. rival in consumption and subject to exclusion.
C. nonrival in consumption and subject to exclusion.
D. rival in consumption and not subject to exclusion.
5. A ........ Tax is based on the taxpayer's ability to pay. It imposes a lower tax rate on low-income
earners than on those with a higher income.
[2]
A. Regressive
B. Proportional
C. Progressive
D. All of the above
6. Pareto efficient is:
[2]
A. A concept commonly used in economics, is an economic situation in which it is
impossible to make one party better off.
B. When all person cannot be made better off without worsening the condition of other
persons.
C. if the only way to make one person better off is to make another person worse off.
D. All of the above
7. Fiscal policy is related to:
[2]
A. Public revenue and expenditure
B. Exports and imports
C. Issues and circulation of currencies
D. Money supply and interest rate
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8. The marginal rate of substitution is:
[2]
A. The slope of the Pareto curve
B. The slope of the utility possibilities curve
C. The slope of the contract curve
D. The slope of the indifference curve
9. When an additional unit of output is produced, the extra cost to society is the
A. marginal private cost.
B. marginal external cost.
C. average total cost.
D. marginal social cost.
10. Public goods are provided by government because
A. private firms do not take into account the impact of external costs.
B. governments are more efficient than private firms at producing public goods.
C. people value national defence very highly.
D. private firms will make an economic profit.
SECTION B: TRUE OR FALSE
[20MARKS]
1. Government purchases of goods and services for current consumption are classified as government
investment.
[2]
2. The source of employment income is determined as the place where the services are rendered,
irrespective of the residency of the person making the payment or the place from where the payment is
made.
[2]
3. Market failure refers to a situation where the market does not lead to a desired outcome/result. [2]
4. Negative externalities such as pollution, noise and smoking can be corrected by imposing legislation or
taxes.
[2]
5. Edgeworth Box is an analytical device used to model welfare economic theory.
[2]
6. Lack of data does not prevent policymakers from assessing the potential impact of major changes
to the tax system.
[2]
7. The Ministry of Finance in Namibia is the nation's main tax collecting authority.
[2]
8. Externalities (third parties' effects) can never be positive.
[2]
9. There are no gains from trade or reallocation when there is Pareto Efficient.
[2]
1O.VAT is levied on the difference between the purchase cost of an asset and the price at wt1ich it can
be sold.
[2]
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SECTIONC:
QUESTION 1
Define and explain the scope for Public Finance
QUESTION 2
Describe the five solutions to the problem of externalities
QUESTION3
Describe the main disadvantages of VAT.
[50 MARKS]
[10 MARKS]
[20 MARKS]
[20 MARKS]
SECTION D:
[10 MARKS]
Based on the information provided in the table below. Answer the following question
IncomeTax in 2013
Taxableamount(N$)
0-50 000
50 001-100 000
100 001- 300 000
300 001- 500 000
500 001- 800 000
800 001-1 500 000
Above 1 500 001
Source:PWC
Tax on lower amount{N$)
0
0
9 000
59 000
115000
205 000
429 000
%tax on excessover lower amount
'
0%
18%
25%
28%
30%
32%
37%
i
Namibian Income Tax was taxed in 2013 based on the table above.
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QUESTION 1
[5 MARKS]
Calculate the total amount of tax paid by an individual earning NS750 001 per annum.
QUESTION 2
[5 MARKS]
Calculate the effective tax rate and marginal tax rate
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