Topic: Fiscal Policy and Public Finance

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PSAF – Nov 2023 – L2 – Q6 – Fiscal Policy and Public Finance

Explains debt refinancing, project financing, and the forms of debt refinancing.

Question

The merits and demerits of debt and tax finance for deficit financing are often debated. The choice of one method depends on the objective and overall long-term implications for the economy.

Required:

a. Explain the following:
i. Debt refinancing (1 Mark)
ii. Why debt refinancing may be of interest to a federal authority (4 Marks)
iii. Project financing (2 Marks)

b. Explain FOUR forms of debt refinancing. (8 Marks)

Answer

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Tags: Debt Management, Debt Refinancing, Project Financing, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance

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)

Answer

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Tags: Centralization, Decentralization, Economic Downturn, fiscal federalism, Fiscal Strategies, Monetary Strategies
Level: Level 2

Topic: Fiscal Policy and Public Finance

PSAF – Nov 2014 – L2 – Q5 – Fiscal Policy and Public Finance

Market Failure, Public Goods, Economic Intervention, Developing Economies, Nigeria, Government Intervention

Question

The need for governmental intervention in the economy is justified on the basis of market failure and public goods provision.”

Required:

a. Explain the concept of market failure and public goods. (5 Marks)

b. What conclusions can you draw from the foregoing statement in the context of a developing nation like Nigeria? (10 Marks)

Answer

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Topic: Fiscal Policy and Public Finance

PSAF – May 2021 – L2 – Q6a – Fiscal Policy and Public Finance

Explanation of expenditure assignment principles and drawbacks in a multi-level government setting.

Question

Expenditure assignment deals with the division or sharing of expenditure, regulatory, and tax functions or responsibilities among multi-levels of government in a federation.

Required:

Explain THREE principles guiding expenditure assignment and highlight TWO of its drawbacks.

Answer

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Tags: Decentralization, Expenditure assignment, Fiscal Management, Government Functions, Public Sector
Level: Level 2

Topic: Fiscal Policy and Public Finance, Government Expenditure
Series: MAY 2021

PSAF – May 2021 – L2 – Q5b – Fiscal Policy and Public Finance

Analysis of debt burden through key ratios and explanation of sources for external debt

Question

External debt does not constitute a burden when contracted loans are optimally deployed and the return on investment is sufficient to meet maturing obligations, as and when due, while servicing of the domestic economy is not undermined. The magnitude and severity of debt burden cannot be determined on the basis of debt volume only, rather, the debt volume should be viewed in combination with certain debt ratios for better appreciation of the debt problem.

Required:

Discuss THREE ratios commonly used to analyze the degree of indebtedness of a country and explain TWO sources of external debts.

Answer

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Tags: Debt Analysis, Debt Ratios, External Debt, Fiscal Responsibility, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2021

PSAF – May 2021 – L2 – Q2a – Fiscal Policy and Public Finance

Define debt sustainability analysis, outlining objectives and benefits.

Question

Debt management is a key component of public finance management that enables the government to meet its financing needs at minimum costs and within acceptable levels of risk. One of the diagnostic tools that the government uses in managing its debt portfolio is to conduct an annual Debt Sustainability Analysis (DSA).

Required:
Explain the term “Debt Sustainability Analysis,” identifying its THREE objectives and FIVE benefits.

Answer

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Tags: Debt Management, Debt Sustainability, Economic Analysis, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2021

PSAF – May 2017 – L2 – SC – Q6 – Fiscal Policy and Public Finance

Outline and explain the macroeconomic objectives of Nigeria’s federal government.

Question

State and explain FIVE macroeconomic objectives of the Federal Government of Nigeria.

Answer

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Tags: Economic Policy, Fiscal Management, Macroeconomic Objectives, Nigeria’s Economic Goals
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2017

PSAF – May 2017 – L2 – SC – Q5 – Fiscal Policy and Public Finance

Define external debt and discuss causes and adverse consequences of Nigeria's rising debt levels.

Question

The accumulation of external debt is a common phenomenon in developing countries at the stage of development where external resources are needed to bridge budgetary gap.

Required:

a. Explain what is meant by External Debt. (3 Marks)

b. Discuss the causes and likely adverse consequences of the rising level of Nigeria’s total external debt stock. (12 Marks)

Answer

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Tags: Budget Deficit, Economic Consequences, External Debt, Fiscal Policy, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2017

PSAF – May 2023 – L1 – SA – Q5 – Fiscal Policy and Public Finance

Explains why government intervenes in the economy and identifies Nigeria's macroeconomic objectives.

Question

A national economy requires the involvement of government to thrive, and its presence supports citizens’ livelihoods.

Required:

i. Identify and explain FIVE reasons why the government intervenes in the economy. (7.5 Marks)
ii. Identify and explain FIVE macroeconomic objectives in Nigeria. (7.5 Marks)

Answer

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Tags: Economic Objectives, Government intervention, Nigeria, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2023

PSAF – Nov 2015 – L2 – Q6b – Fiscal Policy and Public Finance

Discusses three allocation roles of government in developing economies to support resource distribution.

Question

Discuss THREE allocation “roles of government” in the context of a developing economy.

Answer

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Tags: Developing Economies, Economic Development, Government Roles, Public Goods, Resource Allocation
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2015

PSAF – Nov 2016 – L2 – Q7b – Fiscal Policy and Public Finance

Identifies and explains three key criteria used to assess income distribution within a society.

Question

Discuss THREE specific criteria for income distribution.

Answer

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Tags: Criteria, Economic Equality, Fiscal Policy, Income Distribution, Redistribution
Level: Level 3

Topic: Fiscal Policy and Public Finance
Series: NOV 2016

PSAF – Nov 2016 – L2 – Q7a – Fiscal Policy and Public Finance

Discusses the income distribution function and identifies three government instruments that can be used to achieve equitable income distribution.

Question

“An equitable system of public finance aims at even distribution of income and wealth among the various sections of a country.”

You are required to discuss the following:

The income distribution function and any THREE instruments that could be used by government.

Answer

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Tags: Fiscal Policy, Government Instruments, Income Distribution, Public Finance, Wealth Redistribution
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2016

PSA&F – Nov 2019 – L2 – Q4b – Fiscal Policy and Public Finance

Discusses circumstances under which debt financing is appropriate and identifies four documents needed for the issuance of bonds.

Question

Public projects can be financed through debt, taxation, and other related revenue. The choice of any one method depends on the objective and the overall long-term implications for the economy.

Required:

Discuss TWO circumstances under which debt financing is appropriate.
Identify FOUR documents required for the issuance of bonds to a state or local government.

Answer

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Tags: Bonds, Debt Financing, Public Projects, Public Sector, Revenue Generation
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2019

PSA&F – Nov 2019 – L2 – Q3b – Fiscal Policy and Public Finance

Explains the term "public debt" and discusses three benefits and two demerits of public debt.

Question

The Debt Management Office (DMO) in Nigeria manages the Nation’s public debt.

Required:

Explain the term “Public Debt.”
Discuss THREE benefits and TWO demerits of public debt.

Answer

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Tags: Benefits, Debt Management Office, Demerits, Public Debt, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2019

PSAF – Nov 2016 – L2 – Q5b – Fiscal Policy and Public Finance

This question explains the adverse consequences that public debt can have on a nation's economy.

Question

Explain any THREE ways by which public debt can constitute a burden to the nation.

Answer

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Tags: adverse effects, Borrowing, Economic Challenges, Public Debt
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2016

PSAF – Nov 2016 – L2 – Q5a – Fiscal Policy and Public Finance

This question discusses how external borrowing can assist in overcoming the economic recession in Nigeria.

Question

Discuss how external borrowing can bail out the Nigerian economy from the economic recession.

Answer

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Tags: Economic Recession, External Borrowing, Fiscal Policy, Nigerian Economy, Public Debt
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2016

PSAF – Nov 2020 – L2 – Q6b – Fiscal Policy and Public Finance

Explain the five phases of the economic cycle in relation to fluctuations in GDP.

Question

Economic cycle, also known as business cycle, refers to the upward and downward movements (fluctuations) as shown in the national gross domestic product during a given period.

Required:
Explain the five phases of an economic cycle.

Answer

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Tags: Business Cycle, Economic Cycle, expansion, GDP, Recession
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2020

PSAF – Nov 2020 – L2 – Q4b – Fiscal Policy and Public Finance

Explain five principles that should guide the design of grants for effective fiscal federalism.

Question

The growth of the grant system is an important factor in the development of fiscal federalism. The grant system is concerned not only with the level of grants and the programme areas, which should be supported, but also the form in which the grants are to be given.

You are required to explain five principles that should guide grant design.

Answer

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Tags: Financial Support, fiscal federalism, Funding Principles, Grant Design, Public Sector
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: NOV 2020

PSAF – May 2018 – L2 – Q6 – Fiscal Policy and Public Finance

Defines public debt and identifies factors contributing to the accumulation of public debt in developing countries.

Question

“The consequences arising from the continual accumulation of public debts in developing countries may discourage growth in such economies.”

Required:

a. Explain the term “public debt.” (5 Marks)

b. Write brief notes on FOUR factors responsible for the accumulation of public debt in developing countries. (10 Marks)

Answer

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Tags: Debt Accumulation, Developing Countries, Public Debt
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2018

PSAF – Nov 2018 – L2 – Q7 – Fiscal Policy and Public Finance

Discuss the objectives of an ideal intergovernmental fiscal system and the problems facing intergovernmental fiscal relations in Nigeria.

Question

“There are critical issues and problems with decentralisation of government and intergovernmental fiscal relations in Nigeria.”

Required:
a. The main objectives of an ideal system of fiscal relations among sub-national units in a federation.
(6 Marks)
b. Three problems of intergovernmental fiscal relations in Nigeria.
(9 Marks)

Answer

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Tags: Fiscal decentralization, fiscal federalism, intergovernmental relations, sub-national fiscal relations
Level: Level 2