Question

1. Explain two main reasons why we need to study public finance 2.

Distinguish between the “organic view” and “mechanistic view” of the existence of government

3. Explain the concept of market failure and discuss five reasons why there is market failure

4. What is meant by market failure? Identify and discuss four conditions under which the market fails to optimally allocate resources.

5. What is meant by the term government failure and explain five reasons why there may be government failure in Ghana.

6. Define corruption and explain five reasons that will make a bureaucrat corrupt

7. Discuss five measures that can be adopted to control corruption in Ghana

8. Explain Public-Private Partnership in the allocation of resources

9. Discuss five benefits of Public-Private Partnership to the government and tax payer.

10. Distinguish between the allocation, distribution and stabilization functions of the budgetary process

11. Discuss the four main stages of the budgetary cycle

12. Distinguish between Positive Analysis and Normative/Value Judgment Analysis in public policy

13. Define a public good and give two examples of pubic goods in Ghana explaining why you think they are public goods

14. Explain the two main reasons why market forces will not lead to the efficient provision of public goods.

15. What is meant by the free-rider problem? Explain your answer using practical and innovative examples.

16. Carefully distinguish between a private good and a public good.

17. Explain why it is inefficient to exclude anyone from consuming a public good once it is produced.

18. There is very little difference between a public good and an externality. Comment on this view.

19. What is meant by the term externality? Cite five examples of externalities explaining why you think they are externalities.

20. Explain five characteristics of an externality 21. What is meant by internalization of an externality?

22. Explain how mergers and social conventions can be used to internalize an externality.

23. Explain how corrective taxes and subsidies can be used to internalize an externality.

24. Explain two private responses and three public responses to the internalization of an externality.

25. Explain the concept of information asymmetry and give two examples in Ghana.

26. Distinguish between moral hazards and adverse selection citing two examples in each case.

27. Explain the concept of Principal-Agent problem and how it leads to an issue of information asymmetry

28. How can the problem of information asymmetry be avoided in the used car market, job market and financial market?

29. Write concise notes on any two of the following Public expenditure growth models (a) Wagner's Law/model (b) Development model (by Musgrave and Rostow) (c) Peacock and Wiseman model

30. Explain five causes of public expenditure growth in Ghana as stipulated by Adolf Wagner

31. Using the Wagnerian hypothesis, discuss six factors that influence the size of public expenditure in Ghana.

32. The Kumasi Metropolitan Assembly (KMA) is concerned with the level of air pollution caused by tyre burning for the processing of livestock carcass for consumption in Suame and its environs. (a) Why should the tyre burning be a problem in a market economy? (b) Compared to socially efficient level of tyre burning, will there be over-production or under-production of tyre burning by markets? (c) Discuss three options available to KMA to help reduce the level of air pollution, stating clearly the option(s) you think will be most successful.

33. Write concise notes on the following fiscal concepts (a) Allocative and distributive role of government (b) Information asymmetry and the market for lemons

34. Explain why in the case of a public good the individual has the incentive to hide his/her preference.

35. In your own words, explain the free rider problem in the case of public goods.

36. In your own words, explain the non-excludability and non-rivalry condition of a public good.

37. Define information asymmetry and give examples of market characterized by information asymmetry.

38. In your own words, explain George A. Akerlof’s illustration of adverse selection i.e. the market for lemons.

39. Discuss five functions of a tax

40. With relevant examples, distinguish between progressive, proportional and regressive tax

41. Distinguish between tax evasion and tax avoidance

42. Explain five characteristics that constitute a good tax system

43. Is it justified for the rich and poor to pay the same level of tax?

44. Explain the concept incidence of tax?

45. Distinguish between statutory incidence and economic incidence of tax

46. “People who pay personal income taxes are the same people who own corporations. Therefore there is no need for corporate taxation when the people pay personal income tax’’. To what extent do you agree to this?

47. Explain five functions of fiscal policy in Ghana.

48. Explain five factors that has accounted for the weak performance of fiscal policy in Ghana.

49. Distinguish between government deficit and public debt

50. Write short notes on any of these two models/views on public debt burden (a) Lerner’s view on public debt (b) Overlapping generation model © Neoclassical model

Answer 1

1. Two main reasons why we need to study public financer as follows-

A. Price stability- Public Finance are needed to Study about price stability and it helps in finding out various trends of inflation and deflation and government also uses it as monetary tool to control the prices of various consumer related goods and services in the economy to have a control over the money supply.

B. Proper allocation of resources- it is needed in order to property distribute the resources by government to various classes of public because public finances are used in order to distribute the resources of the society and other resources which are available to the government to the various sections of society in order to maintain equity between them.