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Public Finance > Module 6 > Flashcards

Module 6 Flashcards

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1
Q

MISCONCEPTIONS ON BUDGETING
Literature on budgeting is so numerous that causes confusions on the instead of
enlightenment. This are due to:

A

Lack of system
Lack of comprehensiveness
Lack of consistency
Lack of integration in the budget documents

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2
Q

was used by the King’s treasurer, the exchequer, to carry documents
explaining the king’s fiscal needs. Later the budget containing the documents explaining the needs and resources of the country.

A

Bouget

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3
Q

The term budget traced back to the Middle English word derived from Middle French word Bouget , diminutive of bouge means leather bag, which in turn was derived from the Latin word Bulga meaning bag or purse.

A

Bowgette

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4
Q

views it as a process consisting of a series of activities relating
expenditures to a set of goals.

A

Allan Schick

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5
Q

“The budget is the master plan of government. It brings together estimates of
anticipated revenues and proposed expenditures, implying the schedule of activities to
be undertaken and the means of financing those activities. In the budget, fiscal policies
are coordinated, and only in a budget can a more unified view of the financial direction
which the government is going to be observed.”

A

Professor Philip E. Taylor

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6
Q

a financial plan which serves as the pattern for and a control over future operations and
a systematic plan for utilization of manpower material or other resources.

A

Eric Kohler

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7
Q

Objectives of Fiscal Policy

A
  1. Full employment
  2. Price Stability
  3. Accelerating the rate of economic development
  4. Optimum allocation of resources
  5. Equitable distribution of income and wealth
  6. Economic stability
  7. Capital Formation
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8
Q

is spending made by the government of a country on collective needs and wants such
as pension, provision, infrastructure, etc.

A

Public Expenditure

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9
Q

Classifications of Philippine Public Expenditures

A
  1. Capital and Revenue Expenditure
  2. Development And Non - Developmental Expenditure / Productive And Non -
    Productive Expenditure
  3. Transfer And Non - Transfer Expenditure
  4. Plan And Non - Plan Expenditure
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10
Q

Mrs. Hicks classified Public Expenditure on the
basis of duties of government. It is as follows

A
  1. Defense Expenditure
  2. Civil Expenditure
  3. Development Expenditure
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11
Q

Types of Funds

A

Mutual Funds
Exchange-Traded Funds (ETFs)
Hedge Funds
Index Funds
Money Market Funds
Bond Funds
Equity Funds
Real Estate Investments Trusts (REITs)
Commodity Funds
Sector Funds
Target-date funds
Balanced Funds

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12
Q

also known as hybrid funds, invest in a mix of stocks and bonds to provide a balanced approach to risk and return.

A

balanced funds

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13
Q

(or lifecycle funds) are designed to adjust their asset allocation based on the investor’s target retirement date. They automatically become more conservative
as the target date approaches.

A

Target-date funds

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14
Q

concentrate on a specific industry or sector of the economy, such as
technology, healthcare, or energy. They aim to capitalize on the growth potential of that
particular sector.

A

Sector Funds

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15
Q

invest in physical commodities or commodity futures contracts. They
provide exposure to the performance of commodities such as gold, oil, or agricultural
products.

A

Commodity Funds

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16
Q

are funds that invest in income-generating real estate properties. They offer
investors a way to participate in real estate without directly owning physical properties.

A

Real Estate Investment Trusts (REITs)

17
Q

or stock funds, invest primarily in stocks. They can be broadly diversified or focus on specific sectors or regions. The goal is capital appreciation through stock price appreciation.

A

Equity Funds

18
Q

invest in short-term, low-risk securities like Treasury bills and
commercial paper. They are known for their stability and liquidity, making them a
popular choice for preserving capital.

A

Money Market Funds

19
Q

invest in a portfolio of bonds. They can focus on government bonds, corporate bonds, municipal bonds, or a combination of these. Bond funds may vary in
terms of risk and duration.

A

Bond Funds

20
Q

aim to replicate the performance of a specific market index, such as the
S&P 500. They offer broad market exposure and generally have lower fees compared to
actively managed funds.

A

Index Funds

21
Q

are investment funds that use various strategies to generate returns for
their investors. They may employ leverage, derivatives, and other advanced techniques.
They are typically open to accredited or institutional investors.

A

Hedge Funds

22
Q

are similar to mutual funds but are traded on stock exchanges like individual
stocks. They often track a specific index, commodity, or a basket of assets.

A

ETFs

23
Q

pool money from multiple investors to invest in a diversified portfolio of
stocks, bonds, or other securities. They are managed by professional fund managers.

A

Mutual Funds

24
Q

refers to the money required to cover the payment of interest and principal
on a loan or other debt for a particular time period. The term can apply both to individual
debts, such as a home mortgage or student loan, and corporate or government debt,
such as business loans and debt-based securities such as bonds.

A

Debt service

25
Q

Budget is a document containing words and figures which proposes expenditures for certain items and purposes.
Expenditures
Salaries, Equipment, Travels
Purposes
Preventing wars, Improving mental health
Figures are attached to each item or purpose.

A

Aaron Wildavsky

26
Q

Budget is termed as

A

-Nothing but a mere scrap of paper
-Voluminous Farce
-Huge piece of garbage

27
Q

refers to
that expenditure which results in creation of fixed assets. They are in the form of
investment. They add to the net productive assets of the economy. Capital Expenditure
is also known as development expenditure as it increases the productive capacity of the
economy. It is an investment expenditure and a non-recurring type of expenditure. For
Eg. Expenditure - on agricultural and industrial development, irrigation dams, public -
enterprises etc, are all capital expenditures

A

Capital Expenditure

28
Q

Expenditure on infrastructure development, public enterprises
or development of agriculture increase productive capacity in the economy and bring
income to the government. Thus they are classified as productive expenditure. All
expenditures that promote economic growth development are termed as development
expenditure.

A

Development or Non-Developmental Expenditure/Productive or Non Productive Expenditure

29
Q

is also known as development expenditure as it increases the productive capacity of the
economy.

A

capital expenditure

30
Q

relates to that expenditure which results in
creation of income or output

A

Non-Transfer expenditure

31
Q

refers to those kind
of expenditures against there is no corresponding transfer of real resources i.e., goods
or services. Such expenditure includes public expenditure on :- National Old pension
Scheme, Interest payments, subsidies, unemployment allowances, welfare benefits to
weaker sections etc. By incurring such expenditure, the government does not get
anything in return, but it adds to the welfare of the people, especially to weaker sections
of society.

A

Transfer Expenditure

32
Q

incurred on development
activities outlined in ongoing five year plan. In 2009-10, the plan expenditure of Central
Government was 5.3% of GDP.

A

plan expenditure

33
Q

is incurred on those activities, which are not included in
five-year plan

A

non-plan expenditure

34
Q

non-development expenditures include

A

-defense
-subsidies
-interest payments
-maintenance

35
Q

This ratio compares the company’s net operating
income with the amount of principal and interest that it is obligated to pay on its current
debts.

A

Debt Service Coverage Ratio

36
Q

Objectives of Budgeting

A
  1. Strengthening administrative process
  2. Achieving more effective and more stringent fiscal controls
  3. Securing efficiency and economy
  4. Effecting better utilization of resources
  5. Controlling Inflation
  6. Broaden understanding and awareness of budget control
37
Q

is an opportunity for government to assess the volume
of taxation & expenditures to offset threats of inflation or economic recession.

A

Budget preparation and formulation

Public Finance (9 decks)

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