This is less of a test and more of an evaluation where u can still refer back to the notes and external material to answer the questions. The main goal is to ensure that you are capable of answering these questions proficiently and effectively, and can use the knowledge from the notes to answer que...
PUBLIC FINANCE
1. Explain five factors contributing to increase in government
expenditure [10 marks]
2. Explain 5 effects of Public Expenditure {10 marks]
MY ANSWER THAT GOT 10 MARKS IN EACH
Number 1
➔ Increase in public debt and its servicing: The government has
been borrowing to finance the various development projects. This
has brought about more interest payments on public loans, and
a consequent repayment of cusch loans when due [2 marks]
➔ High rate of inflation and depreciating value of currency: The
original costs of projects have therefore been increased thereby
leading to increased government expenditures.[2 marks]
➔ Increase in recurrent expenditure: The increasing cost of living
and a consequent demand for higher wages have led to
increased payments to workers so as to enable them to maintain
a reasonable standard of living. [2 marks]
➔ Increased foreign commitment and keener interest in
international policy: Most Countries now increase their
generosity to other African countries and assist in the provision
of military assistance and material aid.[2 marks]
➔ Increase in financial commitment: Most countries have enlarged
the size of the armed forces and equipped them with modern war
equipment. The size of the police force, fire fighting services, and
others concerned with internal security have also increased. [2
marks]
Number 2
1. During a period of less than full employment:
a. If workers are paid higher wages by the government, their
demand for goods and services will increase. Increased
government expenditure will increase the level of aggregate
demand. This will encourage producers to expand output to
meet the increased demand.[2 marks]
2. During a period of full employment
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