QUESTION 1

i) Describe the main characteristics of a merit and a public good

ii) What do you understand by negative externalities? Examine the different means that can be used to tackle these problems

iii) Consider the case for and against a government policy of providing free transport to students.

QUESTION 2

i) What is meant by Cost and Benefit Analysis (CBA)? What are the benefits of conducting a CBA?

ii) Discuss the problems that can be encountered while performing a CBA?

QUESTION 3

i) Describe the main objectives of a government's fiscal and monetary policies.

ii) How successful is it in achieving these objectives?

QUESTION 4

i) Discuss the link between unemployment and inflation?

ii) Use Friedman's adaptive expectation framework to show the effects of contractionary policies such policies in both the short run and long run.

QUESTION 5

Write short notes on any three of the following. (Each part carries equal marks).

i) Public sector borrowing requirement

ii) Foreign aid

iii) Foreign direct investment

iv) The canons of taxation