Grade 10 Business Studies – Public Finance (12 Lessons) Quiz
1. What does 'public finance' mainly study?
Public finance looks at government revenue (taxes, fees), government spending (education, health), and how governments borrow and repay debt to run the country.
2. Which is the largest source of revenue for the national government of Kenya?
Taxes (income tax, VAT, customs duties) collected by KRA are the main source of government revenue in Kenya, funding most public services.
3. Which tax is charged on most goods and services purchased in Kenya?
VAT is an indirect tax applied to the sale of many goods and services in Kenya and is collected at each stage of production and sale.
4. Which tax is specifically applied to imported goods at the border?
Customs duty is charged on goods brought into Kenya across borders; it protects local industry and raises revenue.
5. Which institution is responsible for collecting most national taxes in Kenya?
KRA administers and collects major taxes such as income tax, VAT and customs duties for the national government.
6. What does it mean when a tax system is 'progressive'?
In a progressive tax system tax rates increase as income rises, so higher earners pay a larger share of their income in tax.
7. Which of these taxes is often considered regressive because low-income households pay a larger share of their income on it?
Consumption taxes like VAT are regressive when applied to basic goods because poorer households spend a larger share of their income on consumption.
8. What is a government budget deficit?
A budget deficit occurs when the government spends more than it receives in revenue and must borrow to cover the gap.
9. What does 'public debt' refer to?
Public debt is borrowing by the national government from domestic and foreign lenders to finance deficits or projects.
10. What is a grant from a foreign government or donor?
Grants are funds given to Kenya by donors that do not require repayment, often for specific projects like health or education.
11. Which of the following is an example of a public good?
Public goods like national defence are provided by the government because they benefit everyone and cannot exclude non-payers.
12. What is the main aim of fiscal policy?
Fiscal policy involves adjusting government spending and taxes to manage inflation, growth and unemployment in the economy.
13. Which body approves the national budget in Kenya?
Parliament (the National Assembly) debates and approves the national budget presented by the Cabinet Secretary for the National Treasury.
14. Which office audits government accounts to promote accountability in Kenya?
The Auditor-General inspects public spending and audits government accounts to ensure public funds are used properly.
15. One purpose of devolution (county governments) in Kenya's public finance is to:
Devolution transfers functions and funds to county governments so they can provide local services more effectively.
16. Which of the following is an example of recurrent government expenditure?
Recurrent expenditure covers regular costs like wages and utilities, whereas capital expenditure is for long-term assets.
17. Which is an example of capital expenditure by the government?
Capital expenditure is spending on long-term assets (roads, schools, hospitals) that provide benefits over many years.
18. What does 'tax incidence' mean?
Tax incidence refers to who actually pays the cost of a tax after markets and prices adjust, which may differ from who remits the tax.
19. Which combination of policies is most likely to reduce income inequality?
Progressive taxes and targeted public services transfer resources to poorer groups and improve equality of opportunity.
20. How do subsidies to farmers affect public finance and the economy?
Subsidies lower production costs and can boost local output, but they require government funds, increasing expenditure.
21. Why are public procurement laws important in public finance?
Procurement rules help prevent corruption, ensure competitive bidding and make public spending more efficient and transparent.
22. What is the purpose of fiscal responsibility laws?
Fiscal responsibility laws set limits and rules to keep budgets and borrowing at levels the country can manage over time.
23. How do international organisations like the IMF and World Bank influence Kenya's public finance?
These organisations lend money, give grants and offer policy advice that can shape Kenya's budget choices and reforms.
24. What is the typical effect of remittances from Kenyans working abroad on the country's public finances?
Remittances raise families' incomes and bring foreign currency into Kenya, but they do not directly go into government coffers unless taxed.
25. How does corruption affect public finance in Kenya?
Corruption diverts public resources away from intended services, harming development and public trust while increasing costs.