- 15 Marks
PSAF – Nov 2023 – L2 – Q5 – Fiscal Policy and Public Finance
Discuss arguments for centralization vs. decentralization of fiscal responsibilities and strategies for economic downturn.
Question
Fiscal federalism deals with the division of tax and expenditure functions among the various levels of government in a federation. A federal system of administration allows both centralized and decentralized collective choices to be made by each tier of government.
Required:
a. Explain TWO arguments each in favor of decentralization and centralization of fiscal responsibilities. (6 Marks)
b. Explain THREE fiscal and monetary strategies that government takes to address the impact of the economic downturn. (9 Marks)
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