EXAM

Question 1

Tiebout model

Answer 1

NO Externalities, Perfect, enough communities, complete Mobility
-All of these dont exist

Question 2

Trust Fund

Answer 2

legal arrangements that allow individuals to place assets in a special account to benefit another person or entity.

Question 3

Beneficiary

Answer 3

the person or entity that you legally designate to receive the benefits from your financial products.

Question 4

Pension

Question 5

Risk-free Securities

Answer 5

An investment where the return is known with certainty.
Backing of the Government

Question 6

Internal Debt

Answer 6

the component of the total government debt in a country that is owed to lenders within the country

Question 7

Federal Debt Ceiling

Answer 7

limit, on the total amount of debt that can be outstanding at one time

Question 8

Liberty Bond Act

Answer 8

a debt obligation issued by the U.S. Department of the Treasury in conjunction with the Federal Reserve. Also known as a Liberty Loan, it was a war bond, issued in four installments in 1917-18 as a means to finance the U.S.’ participation in World War I and the Allied war effort in Europe

Question 9

Default Risk

Answer 9

the risk that a lender takes on in the chance that a borrower will be unable to make the required payments on their debt obligation

Question 10

Financial Market

Answer 10

A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals,

Question 11

Accrual Cash

Answer 11

tracking income and expenses as they are incurred (when an invoice is sent or a bill received) instead of when money actually changes hands.

Question 12

Subsidiarity

Answer 12

The principle that government responsibilities for a function should be at the lowest level of government that can deliver the function efficiently.

Question 13

Fiscal Disparity

Question 14

Evidence-based budgeting

Question 15

Zero-based budgeting

Answer 15

a method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a “zero base,” and every function within an organization is analyzed for its needs and costs.

Question 16

Participatory budgeting

Answer 16

Budgets formulated with the active participation of all affected employees.

Question 17

Annual Comprehensive Report (ACFR)

Question 18

General Accepted Accounting (GAAP)

Answer 18

Funds distributed to states and local general-purpose governments by the federal government

Question 19

TARP

Answer 19

o help stabilize the U.S. financial system, restart economic growth, and prevent avoidable foreclosures

Question 20

ARRA

Answer 20

a massive round of federal spending intended to create new jobs and recover jobs lost in the Great Recession of 2008.

Question 21

Mandatory Spending

Answer 21

Outlays that are made according to definitions of eligibility and benefit or payment formulas rather than directly through the appropriation process; entitlements like Social Security.

Question 22

Revenue

Answer 22

An input; represents an inflow of money and an addition to financial resources.

Question 23

Reconciliation

Answer 23

A mechanism for getting the year’s tax and expenditure policies to coincide with the targets in the congressional budget

Question 24

Hard earmark

Answer 24

Funds provided by the Congress for projects, programs or grants where the purported congressional direction (whether in statutory text, report language, or other communication) circumvents otherwise applicable merit-based or competitive allocation.

Question 25

Adverse selection

Answer 25

Pre-contractual opportunism. Involves uncertainty over asset quality from asymmetric information resulting in market failure.

Question 26

Mandate

Answer 26

It places an expenditure requirement on a government

Question 27

sequestration

Answer 27

Automatic cutting of appropriations if the fiscal target is violated.

Question 28

Accrual accounting basis

Answer 28

Includes long-term liabilities, like net pension obligations.

Question 29

General revenue Sharing

Answer 29

Funds distributed to states and local general-purpose governments by the federal government.

Question 30

Grant

Answer 30

Transfer spending power from one level of government to another. Funds given to a lower level of government that do not have to be repaid.

Question 31

Continuing resolution

Answer 31

Allows agencies to function when a new fiscal year begins before agency appropriation laws have been approved for the year.

Question 32

standards for accounting and financial report ting

Answer 32

Standards for accounting and financial reporting.

Question 33

Fiscal imbalance

Answer 33

Mismatch between need for government services and capacity to finance those services.

Question 34

budget

Answer 34

A financial plan, including proposed expenditures and estimated revenues, for a period in the future.