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SPEA-V 186 Exam One with Questions
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Wal-Mart employees have reduced incentive to maintain their health because of the attractive health - ✔✔moral hazard Which of the following would be described as a common pool resource? - ✔✔An Aquifer Which pair of goods is subject to exhaustion as defined in the theory of public goods? - ✔✔Private goods and common pool resources Which of the following best describes second hand smoke, car exhaust, and manufacturing emissions? - ✔✔Negative externality Times are tough for fishermen on the North Sea. Stocks of adult cod have halved since 1982 and stock of haddock have fallen by two-thirds. Explanations include pollution, spontaneous variations common in fish populations, and overfishing. The Economist notes: "Fishermen's long- term survival in the business depends on stocks being maintained at sustainable levels. But each skipper does not know what those levels might be, nor how much others are catching. So he catches as much as he can, to beat the next boat. The result is overfishing." (January 19, 1991, p. 17)
The North Sea fishery is characterized by: - ✔✔failure of exclusion and rivalry in consumption If a good is characterized by easy exclusion but many may concurrently use it without reducing the amount available for others, the good is a: - ✔✔toll good Which of the following is an application of the principle of moral hazard? - ✔✔People build homes in areas subject to severe flood damage when federally-subsidized insurance is available You are at Memorial Stadium for a football game. Unfortunately, there are many empty seats because your team isn't very good and neither is its opponent. As you watch the game you are eating a hot dog. Which of the following is a correct statement? - ✔✔The hot dog is a private good and the game is a toll good Toll goods are characterized by: - ✔✔joint use and exclusion feasible Which of the following is cited as a reason for establishing the public sector? - ✔✔Publics goods are generally under produced by private firms Health insurance companies will often screen new patients in order to determine the patients' health status. This information is used to
An effective public budgeting system should: - ✔✔provide accurate and relevant information to decision makers. recognize competing claims on resources and alternative uses. provide incentives for public officials to respond to public demands. Budgets can be classified based on how the information is presented. Which of the following budget categorization should i consult if I want to know how much money is budgeted for national defense? - ✔✔A functional categorization Advantages of a capital budget process include all the following EXCEPT: - ✔✔Facilitate borrowing to finance all infrastructure projects. Which of the following is not a characteristic of a capital expenditure, for the purposes of government budgeting? - ✔✔recurring nature Running a deficit on capital budgets that is financed by debt is often justified on the basis that it improves intergenerational equity. Please explain the argument of intergenerational equity as discussed in class. - ✔✔Capital projects have long lives and are expensive. Upfront financing out of tax revenues implies those who pay for the project might not be around to benefit from the project. Using debt to finance capital projects solves this problem by aligning the benefits of the
project with the cost of the project. In other words, those who benefit from the project in each year must pay taxes in those years to finance the debt that was borrowed to build the capital project. Which of the following committees is responsible for preparing the congressional budget resolution? - ✔✔Budget committee Which of the following laws established the CBO? - ✔✔Congressional Budget and Impoundment Act of 1974 The Federal government prepares two separate budgets: one for operating expenses and one for capital expenses. - ✔✔False Which of the following agencies were established in the same year? - ✔✔General Accounting Office and Bureau of the Budget Which of the following is not an agency of the legislative branch? - ✔✔Office of Management and Budget Which of the following did the Balanced Budget and Emergency Deficit Control Act of 1985 do? - ✔✔Establish declining deficit targets aiming toward a balanced budget in 1991.
A continuing resolution enables an agency to: - ✔✔continue operations in a fiscal year, despite the fact that it has received no appropriation for that year. Which of the following is correct about the Government Accountability Office? - ✔✔It does not report to the President. The most recent presidential budget that was presented to Congress with a planned surplus was presented by what President? - ✔✔Clinton Sequestration in the federal budget process: - ✔✔was introduced by the Gramm-Rudman-Hollins Act. "The Congressional Budget and Impoundment Control Act of 1974" saw the formation of: - ✔✔The Congressional Budget Office (CBO). How many Sub-committees are in the Senate Appropriations committee? - ✔✔ 12 What is the name of the Senate Appropriations subcommittee that has jurisdictions for National Aeronautics and Space Administration (NASA)? - ✔✔Commerce, Justice, Science, and Related Agencies
An example of discretionary spending would be: - ✔✔Federal highway spending Which of the following is not discretionary spending under the rules of BEA90? - ✔✔Spending for the Social Security benefits Which of the following is a means-tested entitlement program? - ✔✔Medicaid Federal entitlement programs are: - ✔✔Mandatory spending Some federal outlays are determined to be legally "uncontrollable" because: - ✔✔They do not go through the annual appropriation process. Which statement about federal mandatory spending is accurate? - ✔✔Spending for social security benefits is officially mandatory. Which statement about our national health care system is NOT accurate? - ✔✔The Medicare trust fund will be exhausted sooner than the Social Security trust fund if the current systems of finance are not changed.
Why is important to analyze real spending rather than nominal spending? - ✔✔We are interested in knowing if the government is providing more goods and services. Nominal spending reflects changes in both price and quantity while real spending reflects changes in only quantity. Therefore, when we analyze nominal spending, we cannot tell if an observed increase in spending is the result of the government buying more goods/services OR the government buying the same amount of goods/services, but paying more dollars for each unit. Because real spending already adjusts for price changes, any movement in real spending implies a change in the amount of goods/services bought by the government. Which of the following arguments is based on the concept of adverse selection? - ✔✔Private medical insurance companies seek to exclude those most likely to need healthcare The Wal-Mart work force reflects a growing fear of many employers that the people who work for them are increasingly at risk for health problems. Many of Wal-Mart's employees are obese, the company says, and a result is rapidly raising numbers of cases of diabetes or heart disease. The prevalence of these diseases among Wal-Mart employees is increasing much faster than the national average, it says. "The low-income population generally is not as healthy and does not engage as much in preventive care," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured. A risk that a company like Wal-Mart faces, especially when it competes with smaller retailers that offer no insurance at all, Ms. Rowland said, is
attracting too many workers who want the job primarily for the health coverage. The problem that Wal-Mart faces as it attracts many people primarily interested in health insurance - ✔✔adverse selection The Wal-Mart work force reflects a growing fear of many employers that the people who work for them are increasingly at risk for health problems. Many of Wal-Mart's employees are obese, the company says, and a result is rapidly raising numbers of cases of diabetes or heart disease. The prevalence of these diseases among Wal-Mart employees is increasing much faster than the national average, it says. "The low-income population generally is not as healthy and does not engage as much in preventive care," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured. A risk that a company like Wal-Mart faces, especially when it competes with smaller retailers that offer no insurance at all, Ms. Rowland said, is attracting too many workers who want the job primarily for the health coverage.
