[This question paper contains 4 printed pages.

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Sr. No. of Question Paper 7038 D Your Roll No ....•...........

Unique Paper Code 227503

Name of the Course B.A. (H) Economics

Name of the Paper Public Economics

Semester v
Duration : 3 Hours Maximum Marks : 7 5

Instructions for Candidates

1. Write your Roll No. on the top immediately on receipt of this question paper.
2. Attempt five questions in all, selecting three question from each Section A and
two questions from Section B.
3. Answers may be written either in English or in Hindi; but the same medium should
be used throughout the paper.

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SECTION A ((.Cf(JS 3l}

1. (a) Write down the three major functions of government in a mixed economy.
Provide examples to show that these functions often overlap in practice.

(b) When is it desirable to provide private goods publicly? Can the

rationing devices achieve efficiency when private goods are provided
publicly? (7 ,8)

P. T.O.
7038 2

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2. Explain, in detail with diagrams, the general equilibrium condition for

attaining Pareto optimality in an economy providing a mix of public and private
goods. (15)

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3. (a) Explain how externality is a problem of improper allocation of property
rights. Can it be solved through mutual bargaining ?

(b) Explain how regulations can also solve the problem of negative
externality. (10,5)

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4. (a) In an inter-temporal consumption framework consider a net saver. Suppose

a tax on interest income is introduced. It is found that the magnitude of
savings in the post-tax scenario remains exactly the same as in the pre-tax
scenario. Is it correct to infer from this that a tax on interest income does
not entail any dead weight loss ?

(b) Derive the numerical expression for calculating dead weight loss
associated with commodity taxation, clearly specifying the various elements
involved. (1 0,5)
7038 3

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5. (a) Explain, with diagrams, the role of elasticity of demand and supply in
determining the economic incidence of taxation of commodities.

(b) What are 'Impure Public Goods'? Discuss and explain the various ways of
classifying them. (9,6)

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SECTION B (~ <Sr)

6. What are the reforms in personal income tax and corporate taxes proposed in the
direct tax code ? (15)

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7: Discuss the political hurdles being faced to implement Goods and Service
Tax in India, with special reference on States' apprehensions regarding revenue
autonomy. (15)

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7038 4

8. (a) What is the rationale for inter-governmental transfer of resources in a fiscal

federal system ?

(b) Briefly discuss the different channels of transfer of resources from Center to
the states in Indian federalism. (5, 10)

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9. (a) "There is no agreement among economists either on analytical grounds or on

the basis of empirical results whether financing government expenditure by
incurring a fiscal deficit is good, bad or neutral in terms of its real effects,
particularly on investment and growth". Briefly discuss the views of different
schools of thought regarding the effect of fiscal deficit on investment and
growth.

(b) Write down the limitations of using the concept of fiscal deficit for policy
purposes. (9,6)

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(3500)