Test 3 Flashcards
what is benefit spillover
a critical factor in deciding what level of government should provide a public service. EX: should the state provide trash services or local
what is the correspondence principal
the first principal in assigning responsibility for government services. Says services whose benefits do not exceed the local government should be provided by the local government (and so on)
what is the subsidiary principal
says that governments responsibilities should be at the lowest levels possible to be as efficient as possible (brings it closer to the people so resources are allocated efficiently)
what is devolution
when more responsibility is placed on lower parts of government
what are the 3 things government can do to provide equal financial services
- revenue adjustments
- grants
- mandates
what are revenue adjustments
reliefs done in the tax base. EX: deductions or credits
what are the 4 types of categorical grants
- matching
- maintenance of effort
- revenue sharing grants
- education LOANS
what are matching categorical grants
grants that for every dollar spent is matched by the federal government (to a certain amount)
what are maintenance of effort categorical grants
grants that say you must spend the money given to you by the federal government (NOT REPLACE IT WITH YOUR MONEY)
what are revenue sharing categorical grants
grants with little to no restrictions (only happen on state and local level now)
what are mandates
a constitutional provision that places an expenditure on the government. EX: money mandated that Jewish people are given money from antisemite actions
what are the 3 characteristics of capital projects
- long life
- large price tag
- one time project`
what are the 4 aspects of a capital implementation plan (CIP)
- consequences of failure
- benefits from facility
- cost and financial impact of project
- citizen attitude towards project
what is discounting
the process of turning benefits and costs overtime into the present period
what is an unfunded liability
any liability that does not have funding set aside for it
how does the federal government fund debt
treasury bonds
how does state government fund debt
municipal bonds
what is social security funded by
payroll tax
what 3 things to debt come from
- covering deficits
- financing capital project
- covering short periods of time where bills exceed cash
what is rollover
when the cash to pay the principal comes from additional borrowing (also called refinancing)
what are the 2 types of debt
- gross debt- equals all federal debt
- debt held by private investors- all federal debt except debt held by the federal reserve
2 types of municipal debt
- full faith and credit obligations - general obligation bonds
- non-guaranteed debt- revenue bonds (issued on capital projects)
what are the 3 parts to the agency budget request paper
- narrative
- detail schedule of objectives
- cumulative schedules
2 types of debt
- term
- serial
what is term debt
the total amount paid back at the maturity of the bond
what is serial debt
the amount paid back with the different interest rates during the entire term of the bond
what is new performance budgeting
results driven budgeting with society achieving their goals (desired budgeting form)
2 types of funds
- proprietary funds- self supporting government entities (post office)
- fiduciary funds- pension based funds
what are the different types of accounting
- cash basis
- full accrual
- modified accrual
what is cash basis accounting
revenue when cash received and expenditures when payment complete
what is full accrual accounting
revenues when earned, expenditures when good or service is used (used by private firms)
what is modified accrual accounting
revenues in period when measurable, expenditures when liability incurred. (used by the government)
3 stages of cash management
- cash mobilization - getting the use of the money owned to the government asap
- disbursement- making payments as late as economically reasonable
- investment- doing something with the difference in those other balances
what is an underwriter
bonds that are too large to be sold to an individual so a FIRM buys the entire bond (money goes into a SUNK FUND)
what did the panic of 1907 do
created a run on banks
what did the Glass Steagall act do
kept commercial and investment banks from doing activities together
who is on the FOMC
7 board of governors + 5 rotating district bank presidents
what does the modern monetary theory say
governments that spend and tax in a currency “under their control” are not constrained by revenues when it comes time to spend
what is the dual mandate of the FOMC
- maintain price stability
- promote full employment and economic growth
what does the federal funds rate do
increases or decreases the rate when banks lend between each other
what does the discount rate do
increases or decreases the interest rate of funds held at the fed
