This question attracted a lot of candidates most of whom scored relatively high marks. Candidates were asked to distinguish between capital expenditure and recurrent expenditure; fiscal policy and monetary policy, and explain four reasons why the government of a country imposes taxes in the (a) and (b) parts of the question respectively. Most candidates had a good understanding of the pairs of concepts and were able to distinguish between them correctly with examples in the (a) part of the question, they were also able to mention and elucidate their points in the (b) part of the question.
           
Candidates were expected to answer thus:

(a)(i) Capital expenditure- These are expenses made by government on physical assets that are durable in nature on the other hand.
Recurrent expenditure- are expenses that are made by government on regular basis.
(ii)  Fiscal policy- is the use of taxation and government spending to achieve desired economic objectives while
Monetary policy- involves the use of instruments such as interest rates; open market operations etc. to regulate money supply to achieve desired economic objectives

(b)(i)  To raise revenue for administration, defense and to provide social services.
(ii) To regulate the importation of some commodities considered harmful. The tax makes the goods expensive to deter consumers.
(iii) To redistribute income between the rich and the poor. This is done through the PAYE System where the rich pay higher tax then the poor.
(iv) To protect local infant industries from foreign competition.
(v) To correct a balance of payments problem by imposing taxes on imports to increase their prices to discourage imports.
(vi) To check deflation or inflation.    
(vii) To prevent dumping. Taxes are imposed on dumped goods to raise their prices to discourage imports.
(viii) As a retaliatory measure against other countries.    
(ix) To create and protect employment in the domestic economy.