NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
NOVEMBER 2018 EXAMINATION

COURSE CODE:       BFN411                                                         CREDIT UNIT:   3       

OURSE TITLE:         PUBLIC FINANCIAL MANAGEMENT

TIME ALLOWED:   2^1/2 HOURS  

INSTRUCTIONS:

1. Attempt question number one (1) and any other three (3).

Question 1

Assume that the Federal Government of Nigeria earned N1,515,345,422,138.00 from non-oil sources and N4,435,222,140,288.00 from oil in 2017. You are required to share the revenue based on the principle of allocation enunciated below. Your answer should be shown in billions of Naira.                    

Principles of Allocation                                                         Percentage

• Equality                                                                      45.00
• Population                                                                   25.63
• Population Density                                                       1.45
• Internal Revenue Generation Effort                             8.31
• Land Mass                                                                     5.35
• Terrain                                                                          5.35
•  Rural Roads/Inland Waterways                                  1.41
• Portable Water                                                              1.50
• Education                                                                      3.00
• Health                                                                                       3.00

Total                                                                         100.00

  25 marks

Question 2

1. Discus any five instruments for government intervention in the national economy.10 marks
2. Differentiate between the mechanisms of direct and indirect monetary control. 5 marks

Question 3

1. Discuss any five fiscal policy objectives through which government intervenes in the economy.    10 marks
2. Describe any five direct taxes a government levy.                                        5 marks

Question 4

1. Describe any six rules or canon of taxation      6 marks
2. With an aid of a graph, explain the behaviour of Progressive Tax, Proportional Tax and Regressive Tax.        9 marks

Question 5

1. On the authority of Pandey (2005), describe the purpose of budgeting for both the public and private sectors.         6 marks
2. Briefly discuss the term Performance Budgeting.                                         5 marks
3. Explain the characteristics of Performance Budgeting?                                4 marks

Question 6

a)

Table 1: Summary of Hypothetical Federal Government Finances (N Million)                                                                                                              

1. From Table 1 above, calculate the approximate ratio of oil revenue to non-oil revenue of the federally collected revenue for each year. 2 1/2 marks
2. Calculate the percentage (to 2 decimal places) contribution of each source of revenue to total revenue for the five years.  5 marks         

b) Cost of capital in the public sector is difficult to calculate using the private sector approach of market value. In the light of this statement, explain what would you recommend to be used as cost of capital in the public sector?        8 marks