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2013-11-08 13:17:39
Budget Finance Midterm Review

Budget Finance Midterm Review
Show Answers:

  1. When did the US government last borrow an amount
    equal to GDP?
    p. 3 WWII
  2. What is another term for output?
    p. 3 efficiency
  3. What is another term for outcome or impact?
    p. 3 effectiveness
  4. What are the two properties of public goods?
    p. 5 non-excludability and non-rivalry
  5. What is another term for spillovers?
    p. 5 externalities
  6. What important budgeting legislation was passed in
    p. 10 Budget and Accounting Act
  7. In 1939, the Bureau of the Budget was moved from the Treasury Department to where?
    p. 10 Executive Office of the President
  8. What is another term for long-lasting assets?
    p. 13 fixed assets
  9. The argument can be made that funds should diverted from social welfare programs in order to stimulate what?
    p. 14 economic development
  10. The responsibility to use the budget as an
    instrument of economic policy dates back to what act of Congress?
    p. 14 Employment Act of 1946
  11. Whereas an accounting operating statement is
    retrospective, a budget is what?
    p. 15 prospective
  12. Instead of a single budget, what three types may be used in a series?
    p. 15 operating, capital, and special fund
  13. Generally speaking, budgets can be conceived in what three ways?
    Surprise Question (Chapter 1)
  14. Basically speaking, what are the two types of
    budgeting information?
    p. 18 program and resource
  15. Budgets traditionally deal with what two resources?
    p. 18 money and personnel
  16. What are the three basic approaches to decision making?
    • p. 18 pure rationality, muddling through, and
    • limited rationality
  17. What is another terms for muddling through?
    p. 18 incrementalism
  18. What is the major assumption involving the pure rationality approach?
    p. 19 perfect information
  19. Keeping government small has been advocated as a means of protecting individuals from what?
    p. 26 tyranny
  20. What type of expenditure occurs when government consumes resources that might otherwise be used by the private sector?
    p. 28 exhaustive
  21. What type of expenditure occurs when government transfers resources instead of consuming them?
    • What type of expenditure occurs when government
    • transfers resources instead of consuming them?
  22. What President complained about the
    military-industrial complex?
    p. 28 Eisenhower
  23. In the distant past, government expenditures rose during wartime and fell during peacetime but, in the recent past, they have only risen since what war?
    p. 35 Vietnam
  24. What type of programs resulted in the continued high spending since the 1960s?
    p. 35 entitlement
  25. What level of government accounted for the bulk of government spending prior to 1900?
    p. 36 local
  26. What level of government accounted for the bulk of government spending after the Great Depression?
    p. 36 federal
  27. From 1926 to 2010, the cost of government rose from 12% of GDP to what?
    p. 37 36%
  28. The previous decline in the number of local governments was attributable to what?
    p. 38 school district consolidation
  29. The present increase in the number of local
    governments is attributable to what?
    p. 38 special districts
  30. What is the major source of revenue for the federal government?
    p. 38 individual income tax
  31. What is the second major source of revenue for the federal government?
    p. 38 social insurance
  32. What are the two main types of federal spending?
    p. 39 discretionary and mandatory
  33. What are the three largest entitlement programs?
    p. 39 Social Security, Medicare, and Medicaid
  34. Which two states have neither an individual income
    tax nor a sales tax?
    p. 40 Alaska and New Hampshire
  35. What is the largest category of local expenditure?
    p. 40 education
  36. How much are total government expenditures as a percent of GDP?
    p. 47 36
  37. What is the basic measure of economic output, the
    value of the total goods and services produced, excluding US earnings abroad
    and foreign earnings in the US?
    p. 48 GDP
  38. What is the basic measure of economic output, the
    value of the total goods and services produced, including US earnings abroad
    and foreign earnings in the US?
    p. 48 GNP
  39. What is the measure of capital investment net of
    p. 48 NNP
  40. What year was the Yom Kipper War and the first OPEC oil shock?
    p. 50 1973
  41. What are the four BRIC countries?
    p. 50 Brazil, Russia, India, and China
  42. What does FDI stand for?
    p. 51 foreign direct investment
  43. In what year did the US become a net debtor nation,
    meaning the value of foreign investments in the US exceeded the value of US investments
    p. 52 1985
  44. What rate is too low to finance the demand for
    investments, leaving the economy dependent upon foreign investors?
    p. 52 savings rate
  45. What foreign currency is on the verge of collapse?
    p. 54 Euro
  46. After the Democrats won the midterm Congressional elections of 2006, the Great Recession began in 2007 and official unemployment reached what percent?
    p. 55 9%
  47. What were the three main goals of the Employment Act of 1946?
    p. 56 full employment, price stability, and steady growth
  48. A person must be seeking employment to be officially
    counted as what?
    p. 57 unemployed
  49. Due to onerous labor regulations, companies often
    resort to hiring what two types of workers?
    p. 58 part-time and temporary
  50. The Phillips Curve indicates a negative relationship
    between unemployment and inflation but a positive relationship was seen in what
    p. 59 1970s
  51. By 2012, what percentage of Americans had been
    unemployed longer than six months?
    p. 60 40%
  52. What measure normalizes GDP for population
    differences between countries?
    p. 61 GDP per capita
  53. What adjective applies to a measure such as GDP when
    adjusted for inflation?
    p. 62 real
  54. What adjective applies to a measure such as GDP when not adjusted for inflation?
    p. 62 nominal
  55. What is the
    net balance or simple trade balance of goods imported and exported?
    p. 65 current account
  56. In 2010, what statistic was at an all-time high of
    $798 billion?
    p. 65 current account deficit
  57. By definition, if there is a current account deficit
    reflecting trade flows, there must be an offsetting surplus in what other account reflecting financial flows?
    p. 66 capital
  58. What four countries are sometimes called, in a most unflattering way, PIGS?
    p. 67 Portugal, Italy, Greece, and Spain
  59. What two deficits are sometimes called the twin
    p. 67 trade and budget
  60. The national savings rate ranged from a record high in 1965 to a record low in what year?
    p. 68 2009
  61. What are the four main factors that combine to
    produce goods and services?
    p. 70 land, labor, capital, and technology
  62. What super-committee agreed to automatic cuts
    divided equally between defense and Medicare beginning in 2013?
    p. 73 Joint Select Committee on Deficit Reduction
  63. What are the three broad types of cyclical
    This is a surprise question
  64. What indicator is used to adjust benefit programs
    for the effects of inflation?
    p. 76 CPI
  65. What are the two major stock exchanges in the US?
    p. 78 NYSE and NASDAQ
  66. What are the two most notable composite indexes of
    stock exchange transactions?
    p. 78 DJIA and S&P
  67. The DJIA hit a low of $7500 in what year?
    p. 79 2009
  68. Government economic policy is divided into what two categories?
    p. 81 fiscal and monetary
  69. Government actions to achieve economic policy are
    divided into what two categories?
    p. 81 discretionary and automatic
  70. What entitlement program is a good example of an
    automatic stabilizer?
    p. 82 unemployment insurance
  71. It was not the New Deal that ended the Great
    Depression but what?
    p. 83 WWII
  72. What side of economics is associated with von Mises (1881-1973), Hayek (1899-1992), and tax cuts?
    p. 83 supply
  73. What three response lags affect fiscal policy?
    p. 85 perception, reaction, and implementation
  74. What procedure allows a President to defer or
    rescind expenditures?
    p. 85 impoundment
  75. What economist is most associated with a focus on monetary as opposed to fiscal policy?
    p. 86 Friedman
  76. The quaint ridges found on the edges of dimes serve as reminders that governments create inflation through a process known as what?
    p. 87 seignorage
  77. More than half of circulating money consists not of
    currency or coins but of what?
    p. 87 checkable deposits
  78. Currency and coins account for what percentage of
    total money in circulation?
    p. 87 10
  79. The Federal Reserve System manipulates what
    three rates?
    • p. 88 federal funds rate, discount rate, and reserve
    • requirement
  80. In what year did the federal funds rate drop to
    p. 89 2011
  81. Describe the operations used by the Fed to
    manipulate the federal funds rate by buying and selling government bonds initially sold by the Treasury Department?
    p. 89 Open Market
  82. The purchase of long-term securities by the Fed to
    inflate the money supply is known as what?
    p. 89 quantitative easing
  83. According to an investigations subcommittee of the Senate Committee on Homeland Security and Governmental Affairs, the recent collapse of financial markets was caused by the lack of what?
    p. 95 regulatory oversight
  84. What two federally sponsored enterprises contributed to the collapse of financial markets through a lack of regulatory oversight?
    p. 95 Fannie Mae and Freddie Mac
  85. What does NBER stand for?
    p. 96 National Bureau of Economic Research
  86. What type of bank collapsed and disappeared during the Great Recession?
    p. 97 investment
  87. What two GSEs were bailed out by the Fed and taken into conservatorship by the Federal Housing Finance Authority?
    This is a surprise question
  88. Which US auto company survived the Great Recession without an infusion of government support?
    p. 97 Ford
  89. What does TARP stand for?
    p. 99 Troubled Assets Relief Program
  90. What program in 2009 allocated $100 billion in TARP funds for low-interest loans to financial institutions to purchase troubled assets?
    p. 99 Toxic Asset Purchase Program
  91. What act in 2009 provided $787 billion in grants to state and local governments for shovel ready projects?
    p. 99 American Recovery and Reinvestment Act
  92. What insurance company was bailed out with an $85 billion line of credit?
    p. 101 AIG
  93. What does AIG stand for?
    p. 101 American International Group
  94. Whereas capitalists focus on the production of
    wealth, socialists focus on what?
    p. 105 distribution of wealth
  95. Whereas capitalists focus on equal opportunities, socialists focus on what?
    p. 105 equal outcomes
  96. Does inflation hurt borrowers or lenders?
    p. 106 lenders
  97. Has inequality in income distribution increased or decreased since the introduction of LBJs Great Society welfare programs in the 1960s?
    p. 106 increased
  98. What index is commonly used to measure income inequality?
    p. 107 Gini
  99. What are the four phases of the budget cycle?
    • Preparing the Budget
    • Approving the Budget
    • Executing the Budget
    • Evaluating the Budget
  100. In 1970, the old BOB was reorganized into what?
    p. 118 OMB
  101. What does OMB stand for?
    p. 118 Office of Management and Budget
  102. Following passage of an appropriations bill, where do federal agencies submit their plans for apportionment?
    p. 123 OMB
  103. What process follows the apportionment process at the federal level?
    p. 123 allotment
  104. What does GAO stand for now?
    p. 124 Government Accountability Office
  105. How is demand characterized when it does not respond to price?
    p. 134 inelastic
  106. What are the two general principles of tax equity?
    p. 135 ability to pay and benefit
  107. What type of equity refers to charging the same amount to taxpayers whose ability to pay is the same?
    p. 135 horizontal
  108. What type of equity refers to treating different
    taxpayers differently?
    p. 135 vertical
  109. What are the three broad types of taxes based upon the treatment of different income groups?
    p. 136 progressive, proportional, and regressive
  110. Households in the top quintile paid what percent of all federal income taxes in 2007?
    p. 136 86
  111. Non-resident state income taxes are also called what?
    p. 137 commuter taxes
  112. What authorized the national income tax in 1913?
    p. 139 16th Amendment
  113. What are the two main ways to reduce the base when computing the federal income tax?
    p. 140 deductions and exemptions
  114. What is the name for dollar-for-dollar reductions in federal income taxes due?
    p. 140 credits
  115. What are the two main types of federal income tax deductions?
    This is a surprise question
  116. In 2011, what was the marginal rate of federal income tax in the highest income bracket for married taxpayers?
    p. 143 35
  117. The EITC is an annual welfare payment that behaves like what?
    p. 144 negative income tax
  118. So-called “wealthy” taxpayers are required to figure their federal income taxes twice,
    once to calculate the regular tax and once to calculate what else?
    p. 144 AMT
  119. What does AMT stand for?
    p. 144 Alternate Minimum Tax
  120. What process does the federal government use to adjust income tax brackets for changes in price levels?
    p. 145 indexing
  121. The informal economy or black market is also known as what?
    p. 145 underground economy
  122. Exclusions, exemptions, deductions, credits, and deferrals are examples of what?
    p. 146 tax expenditures
  123. Taxing companies is generally futile since they pass along the cost of doing business in what two ways?
    p. 147 lower wages and higher prices
  124. In 2010, Social Security benefited 52.5 million people broken down into what three categories?
    p. 147-148
  125. In 2007, Social Security benefited an additional 7.7 million people with what program?
    p. 148 SSI
  126. What does SSI stand for?
    p. 148 Supplemental Security Income
  127. Medicare covers what two groups of people?
    p. 150 elderly and disabled
  128. Medicaid covers what group of people?
    p. 151 poor
  129. What are the two most important “insurance trusts” set up as employee benefits at the state level?
    • p. 151-152 unemployment insurance and workers
    • compensation
  130. What tax is least susceptible to tax avoidance?
    p. 152 property
  131. What are the two major components of real property?
    p. 153 land and improvements
  132. Many states use what type of exemption to reduce property taxes?
    p. 153 homestead
  133. What is the most common approach to property assessment?
    p. 155 market data
  134. With respect to property taxes, what is a percentage
    or fraction of full market value called?
    p. 155 assessment ratio
  135. A tax rate of one tenth of a percent is called what?
    p. 157 mill
  136. Besides real property, some jurisdictions tax what
    other tangible type of property?
    p. 158 personal
  137. What are two examples of intangible personal
    p. 158 stocks and bonds
  138. In addition to general sales taxes, there are what
    two main types of specific sales taxes?
    p. 165 luxury and sin
  139. What is taxed using a benefit-based excise tax?
    p. 165 fuel
  140. What are the two varieties of sales tax besides general and specific?
    This is a surprise question p. 165-167?
  141. States are losing sales tax revenues on what three
    types of sales?
    p. 167 mail, phone, and internet
  142. The US is one of the few industrialized countries
    without what kind of tax?
    p. 171 VAT
  143. What does VAT stand for?
    p. 171 value added tax
  144. What type of tax is levied on addictive products
    like alcohol and tobacco to discourage their use?
    p. 171 sumptuary
  145. What are the two basic types of user charges or fees?
    p. 175 voluntary and mandatory
  146. What type of fee is a special assessment for roads,
    sewers, or schools?
    p. 176 impact
  147. Most states now “earn” money by engaging in what
    formerly illegal activity known as bookmaking?
    p. 178 lottery
  148. The “muddling through” model of decision making is attributable to whom?
    p. 189 Lindblom
  149. Operations research, economic analysis, general
    systems theory, cybernetics, information technology, and systems analysis serve
    as the foundation for what budgeting system?
    p. 189 Planning Programming Budgeting
  150. What does PPB stand for?
    p. 189 planning programming budgeting
  151. What is another name for budgeting feedback?
    p. 193 passback
  152. What is the umbrella term for the overall field of program information?
    • p. 194 performance
    • measurement
  153. What are the four basic mission types?
    • This is a surprise question
    • p. 194-199?
  154. Governments are at a disadvantage compared to businesses when it comes to making decisions since they lack what?
    p. 199 profit motive
  155. What type of budgeting system assumes that there
    will be no change in programs?
    p. 200 current services
  156. What type of budgeting system works with an overall dollar limit factored into limits for subunits?
    p. 201 fixed ceiling
  157. What type of budgeting system is also known as blue
    sky budgeting?
    p. 201 open ended
  158. What type of budgeting system depends upon measures
    for workload and unit cost?
    p. 202 performance budgeting
  159. What type of budgeting system does PPB now stand
    p. 202 planning programming budgeting
  160. What type of budgeting system asks:  What if this program were eliminated?
    p. 202 ZBB- zero based budgeting
  161. What does ZBB stand for?
    p. 205 zero based budgeting
  162. What two
    budgeting systems make the most unrealistic assumptions?
    p. 205 ZBB and open ended
  163. What type of planning focuses on missions, goals, and objectives?
    p. 207 strategic
  164. What is the primary focus of MBO?
    p. 208 workload
  165. What does MBO stand for?
    p. 208 management by objectives
  166. What is also known as continuous quality
    p. 208 TQM
  167. What does TQM stand for?
    p. 208 total quality management
  168. What system is associated with both the
    accountability and authority of managers?
    p. 208 MFR
  169. What does MFR stand for?
    p. 208 managing for results
  170. What type of budgeting system asks agencies to
    prepare fixed ceiling budgets then propose increases?
    p. 208-209 Target Based Budgeting
  171. What does TBB stand for?
    p. 208-209 target based budgeting
  172. The National Performance Review of 1993 became known
    as what?
    • p. 210 National Partnership for Reinventing
    • Government
  173. Coincident with passage of the NPR in 1993 was what
    p. 210 Government Performance Review Act
  174. What does GPRA stand for?
    p. 210 Government Performance and Results Act
  175. What does BPI stand for?
    p. 212 budget performance integration
  176. What does PART stand for?
    p. 213 Program Assessment Rating Tool
  177. What does RMO stand for?
    p. 214 resource management office
  178. The federal government is currently trying to reduce the number of what three types of contracts?
    • p. 218 
    • no-bid, sole-source, and task order
  179. What does GASB stand for?
    p. 221 Governmental Accounting Standards Board
  180. What does the federal government use to achieve its
    policy at the state and local level without paying for it?
    p. 237 unfunded mandates
  181. What predictive technique fits a straight line over a
    series of data points?
    p. 239 linear regression
  182. What method of trend extrapolation relies upon data smoothing in order to plot a straight line?
    p. 239 moving averages
  183. What modeling technique uses a single equation to
    illustrate a linear relationship between one dependent variable and several
    independent variables?
    p. 240 multiple regression
  184. What market imposes some discipline on state and
    local governments with respect to capital budgets?
    p. 241 bond
  185. Expenditures can be reduced in what two ways?
    p. 245 across the board cuts and prioritization
  186. Ideally, what is the appropriate role for a budget
    p. 248 neutral competence
  187. The Budget of the United States is backed up by what
    much larger document?
    p. 253 Budget Appendix
  188. What is another term for non-budgetary transactions?
    • p. 258-259
    • off budget
  189. What agency of the federal government was moved off
    budget since it was expected to operate like a business?
    p. 258-259 US Postal Service
  190. Contingent liabilities are reported publicly but
    remain off budget except in the case of what?
    p. 259 default
  191. What are the four broad types of government
    liabilities in terms of instrument?
    This is a surprise question 259-262?
  192. Sallie Mae deals with what type of loans?
    • p. 262
    • student
  193. Connie Lee deals with what type of loans?
    p. 262 college construction
  194. OMB treats the receipt of user fees by an agency not
    as revenue but as what?
    p. 264 offsetting collection
  195. Which branch of government is said to have the power
    of the purse?
    p. 273 legislative
  196. Besides the referendum, cite two other examples of
    direct democracy at the state or local level.
    p. 274 initiative and recall
  197. The US Supreme Court ruled that state legislatures
    must draw district lines that are proportional to what?
    p. 275 population
  198. At the local level, there is a movement from
    representation in terms of small districts to representation in terms of what?
    p. 275 at-large seats
  199. What reform would likely result in more citizen
    legislators and fewer careerist politicians?
    p. 276 term limits
  200. Independents or moderates are also known as what?
    p. 277 swing voters
  201. In a congressional/presidential system, political
    parties are usually weak compared to what other system?
    p. 278 parliamentary/prime ministerial
  202. When one party controls the Presidency and another party controls the Congress, the situation is often described as gridlock or
    what else?
    p. 279 divided government
  203. Besides separation of powers, what other principle
    frequently results in gridlock?
    p. 279 checks and balances
  204. A large number of representatives in a legislature
    typically results in what type of structure?
    p. 279 committee
  205. What type of joint committee is usually required in
    a bicameral legislature?
    p. 279 conference
  206. A permanent committee is also referred to as what type of committee?
    p. 279 standing
  207. A temporary committee is also referred to as what
    type of committee?
    p. 279 ad hoc
  208. What legislation in 1974 created Congressional
    Budget Committees?
    • p. 286 Congressional Budget and Impoundment Control
    • Act
  209. Name the report that addresses the current and
    future costs of implementing a proposed bill being reported out of committee?
    p. 289 fiscal note
  210. What agency prepares fiscal notes for bills being
    reported out of a Congressional committee?
    p. 289 CBO
  211. According to Article I Section7 of the Constitution,
    tax bills originate where?
    p. 290 House of Representatives
  212. In what committee do tax bills originate in the
    House of Representatives?
    p. 290 Ways and Means
  213. When Congress passes a bill, what office distributes
    copies to the affected agencies for comment?
    p. 291 OMB
  214. What Act was declared unconstitutional by the US
    Supreme Court in 1998?
    p. 292 Line Item Veto
  215. What type of legislation authorizes programs for a
    given period after which they expire?
    p. 295 sunset
  216. What type of veto did the US Supreme Court strike
    down at the federal level in 1983?
    p. 296 legislative
  217. Every federal agency must deal with which three
    committees in each chamber of Congress?
    p. 297 substantive, Appropriations, and Budget