Deck 13: Public Budgeting and Finance

Question 1

Which of the following is NOT a purpose of public budgeting?

A) a means by which a government exercises control over its programs
B) enhancing economic growth
C) a mechanism for government accountability
D) All of the above are purposes of government budgeting.
E) None of the above are purposes of government budgeting.

Answer 1

D

Question 2

The four phases of the budget cycle are

A) preparation and submission, review by the office of management and budget, policy execution, and audit by a specialized agency.
B) preparation and submission, review by the legislature and approval, policy execution, and audit by a specialized agency.
C) preparation and submission, review by the legislature and approval, subcommittee markup and authorization, and audit by a specialized agency.
D) executive approval, legislative consideration, legislative approval, and execution.
E) None of the above.

Answer 2

B

Question 3

Which of the following statements about PPBS is TRUE?

A) PPBS is the prevailing approach to budgeting in the federal government.
B) PPBS was abandoned during the Reagan administration.
C) A key element of PPBS was its multi-year perspective that provided for five-year plans.
D) All of the above are true.
E) None of the above are true.

Answer 3

C

Question 4

Which of the following is NOT a source of revenue for the government?

A) tax rebates
B) fees
C) taxes
D) intergovernmental transfers
E) borrowing

Question 5

The tax in which the ratio of tax to income increases as a taxpayer's income rises is called a

A) progressive tax.
B) regressive tax.
C) proportional tax.
D) sumptuary tax.
E) luxury tax.

Question 6

A key disadvantage of lotteries as a source of state revenue is that

A) lotteries are poor revenue producers
B) lotteries provide a constant level of income that cannot be modified to meet varying demands for revenue.
C) the lottery is a regressive way for states to obtain revenues.
D) All of the above.
E) None of the above.

Question 7

Incremental budgeting has been attacked because it

A) is subject to fraud, waste, and abuse.
B) is overly cautious and biased against innovative alternatives.
C) is impossible to implement
D) All of the above are criticisms of incremental budgeting.
E) None of the above are criticisms of incremental budgeting.

Question 8

A major problem with the rational budgeting model is

A) it relies on reason rather than politics and influence to make budgetary decisions.
B) it provides a clear rationale for resource decisions.
C) it provides large amounts of quantitative data useful in making decisions.
D) All of the above.
E) None of the above.

Question 9

Which of the following is NOT a distinction between capital and operating expenses?

A) Borrowing is typically used to finance capital items while taxes and user fees are mostly used to finance operating expenditures.
B) Taxes and user fees are mostly used to finance day-to-day expenses while capital projects are expected to have a long useful life.
C) The federal government does not divide the budget into separate parts, (operating expenses and capital investments) while most state and local governments do.
D) All of the above are distinctions between capital and operating expenses.
E) None of the above are distinctions between capital and operating expenses.

Question 10

The type of bond that will result in governmental default if debt payments are not made is called a

A) general obligation bond.
B) nonguaranteed bond.
C) federal savings bond.
D) municipal bond.
E) fully guaranteed bond.

Question 11

Budgets typically cover a definite time period; typically five years.

Question 12

The Government Accountability Office, an agency of Congress, provides the audit function for the federal government.

Question 13

The federal government's experience with zero-based budgeting was generally positive which explains why it remains largely in use today.

Question 14

A proportional tax is one in which the tax burden increases as a person's income decreases.

Question 15

The property tax is considered a low-yield tax while income taxes are considered high-yield.

Question 16

Income tax is an example of a regressive tax.

Question 17

The property tax is generally considered regressive.

Question 18

The general sales tax is regressive because low-income persons spend a greater percentage of their disposable income on consumer goods than do high-income persons.

Question 19

User fees are viewed by finance specialists as a fair method of obtaining revenues because frequent users pay more for the service than do infrequent users.

Question 20

Lottery proceeds can fluctuate from year to year making it difficult for state governments to budget accurately.

Question 21

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Objects of expenditure

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 22

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Line-item budget

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 23

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Performance budgeting

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 24

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Zero-based budgeting

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 25

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Progressive tax

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 26

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-User fee

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 27

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Nonguaranteed bonds

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 28

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Sumptuary tax

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 29

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-Circuit breaker

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.

Question 30

Matching Exercise
Match the concepts in the left-hand column to their counterparts in the right-hand column.
-General obligation bonds

A) A tax where the ratio of tax to income increases as a taxpayer's income rises.
B) Numeric codes used by governments to classify expenditures by categories.
C) A selective sales tax imposed on certain items, in part, to regulate consumption.
D) A type of budgeting where a program's continued existence is not assumed and all expenditures, not just new ones, must be justified every year.
E) A type of budgeting that reports the items to be purchased by a government, and the amount of money that will be spent on each item.
F) A charge for a service that is levied by government.
G) A type of budgeting that combines output and cost data from programs to show if they are being efficiently operated.
H) A mechanism that reduces the regressivity of property tax by exempting low-income groups from some portion of their property taxes.
I) Long-term debt that is guaranteed by the entire revenue capacity of the issuing government.
J) Long-term debt in which the principal and interest are paid off using the revenues generated by the facility built with the funds from the bond.