Models for Economic Evaluation

Question 1

Economic appraisal
comparative analysis/evaluation of two or more interventions in terms of their cost and consequences

Answer 1

Economic Evaluation

Question 2

it is the evaluation or assessment of different programs based on their input given Vs results/outcomes generated

Answer 2

Economic Evaluation

Question 3

the most fundamental/basic concept of these economic evaluations are that both the ______ and____ of all the available options are taken into account

Answer 3

costs, benefits

Question 4

vary according to the viewpoint adopted in the analysis

Answer 4

cost and benefit

Question 5

Importance of Economic Evaluations:

Answer 5

At present, resources are being limited while on the other hand, costs of programs are rising in addition with more innovative and technological advancements. Thus, economic evaluation has become a necessary and a dire need

Economic evaluation also helps to prioritize the programs and make the best decision for optimal resource allocation

Economic evaluations are important tools for assessing economic feasibility and efficiency of health interventions

Question 6

Four Major different types of Economic Evaluation Methods

Answer 6

Cost Benefit Analysis (CBA)
Cost Minimization Analysis (CMA)
Cost Effective Analysis (CEA)
Cost Utility Analysis (CUA)

Question 7

-In this method of evaluation, cost of the intervention is compared with the benefit incurred from the intervention

Answer 7

Cost Benefit Analysis (CBA)

Question 8

-In this method of analysis, costs of two or more interventions achieving identical outcome is measured. The intervention incurring the lowest cost is then chosen

Answer 8

Cost Minimization Analysis (CMA)

Question 9

In this method of analysis, cost is measured against the effectiveness of the intervention (effectiveness is the final consequence)

Answer 9

Cost Effective Analysis (CEA)

Question 10

In this method of analysis, cost incurred in the intervention is measured against the “utility” related to health.

Answer 10

Cost Utility Analysis (CUA)

Question 11

ECONOMIC FUNDAMENTALS

Answer 11

Cash flow
Cash Flow Diagram
Time Value of Money
Interest

Question 12

Refers to the money entering or leaving a project or business during a specific period of time.

Answer 12

Cash Flow

Question 13

Shows a visual representation of a cash flow (receipts and disbursements)

Answer 13

Cash-Flow Diagram

Question 14

Cash-Flow Diagram— Details

Answer 14

The horizontal axis represents time. It is divided into equal time periods (days, months, years, etc.) and stretches for the duration of the project.

Cash inflows (income, withdraws, etc.) are represented by upward pointing arrows.

Cash outflows (expenses, deposits, etc.) are represented by downward pointing arrows.

Cash outflows that occur within a time period (both inflows and outflows), are added together and represented with a single arrow at the end of the period.

When space allows, arrow lengths are drawn proportional to the magnitude of the cash flow.

Initial investments are shown at time .

Question 15

Cash flow diagram are always from some perspective.
A transfer of money will an inflow or outflow depending on your perspective.
From the borrower’s perspective, the amount borrowed is an inflow.
From the lender’s perspective, it is an outflow.

Answer 15

Cash-Flow Diagram— Perspective

Question 16

$100 received today is worth more than $100 received one year from now. If you don’t believe this, give me $100 and will gladly give you back $100 in one year.
That would be a bad deal for you because:

I could invest the money and keep the interest earned on your money.

If there was inflation in the economy during the time I was holding onto your money, the purchasing power of the $100 I give back will be less than the $100 you gave me.

There is a risk I won’t return the money.

For all these reasons, when discussing cash flows over time you have to take into account the time value of money.

Answer 16

Time Value of Money

Question 17

_____ is the price paid for the of borrowed money. As with any financial transaction, interest is either something you pay (a disbursement) or something you earn (a receipt) depending on whether you are doing the borrowing or the lending.

Answer 17

Interest

Question 18

is a certain percentage of the amount loaned/borrowed.

Answer 18

Interest earned/ paid

Question 19

________________ interest accrues only on the principle amount invested.

Answer 19

With simple interest

Question 20

________________ interest is earned on interest.

Answer 20

compound interest

Question 21

Compound interest formula:

Answer 21

F= P*(1+ i)^n

Question 22

This formula can be used to calculate the compounded interest on a single payment. It tells how much a certain investment earning compound interest will be worth in the future

Answer 22

Single-Payment Compound-Amount

Question 23

This formula computes P given F. It tells the present value of some future amount.

It tells how much needs to be invested today in order to have a certain sum in the future

Answer 23

Single-Payment Present-Worth

Question 24

This formula can be used to calculate the future value of a number of equal payments

Answer 24

Equal-Payment-Series Compound-Amount

Question 25

This formula calculates the inverse of Equal-Payment-Series Compound-Amount.

It tells you how much you need to set aside each year/month/etc. in order to have a certain amount of money at the end of the equal payments

Answer 25

Equal-Payment-Series Sinking-Fund

Question 26

It tells the amount of equal payments needed to recover an initial amount of capital

Answer 26

Equal-Payment-Series Capital Recovery

Question 27

This formula is the inverse of Equal-Payment-Series Capital Recovery. It gives the current value of a series of future equal payments

Answer 27

Equal-Payment-Series Present-Worth