Question 1:

Using appropriate diagrams, describe the optimal provision of a private good and a public good.

Question 2:

Using appropriate diagram, show how there is an efficiency cost of distortion when government imposes a tax on a product.

(a) Differentiate between absolute and relative poverty.
(b) Distinguish between contingent benefits, means test benefits, and workfare benefits.

Question 3:

Using appropriate diagram, show the effects of a balanced budget multiplier.

Question 4:

Describe the main motives for holding money.

Question 5:

Using the IS-LM model, show the effects of:

(a) an increase in government expenditure.

(b) an increase in money supply.