Which of the following arguments is based on the concept of adverse selection?

Finance

The total cost of workers includes both direct compensation (wages and salaries) and fringe benefits associated with employment, including the cost of post-employment benefits promised the employees.

Question 1 options:

	True
	False

Question 2 (2 points)

 

Which of the following is an accurate statement about the relative size of government purchases and government spending?

Question 2 options:

	Spending includes transfer payments like social security, but purchases do not.
	Neither includes provision of government services by contract with private firms.
	Purchases will be greater than spending because of deficit and surplus adjustments.
	Because spending is the same as purchasing, the measures must be the same.

Question 3 (2 points)

 

Use of modified accrual accounting

Question 3 options:

	records expenditures when contractual payments are made.
	eliminates the need for keeping track of encumbrances during budget execution.
	requires immediate depreciation of all capital assets
	records expenditures when materials are delivered.

Question 4 (2 points)

 

Which of the following would be described as a common pool resource?

Question 4 options:

	A can of soda
	An aquifer
	Private investment
	A movie theatre

Question 5 (2 points)

 

Choose the best way to complete the statement: “A budget is…”

Question 5 options:

	a plan only used in limited cases
	includes a financial plan, a revenue forecast and a plan for managing any differences between the expenditure plan and the revenue forecast.
	a forecast for revenue collection only
	an excuse for a big legislative party.

Question 6 (2 points)

 

Government purchases divert productive resources (land, labor, capital, natural resources) from private use by businesses and individuals to government use in the provision of education, national defense, public safety, parks, and all the other services that governments provide.

Question 6 options:

	True
	False

Question 7 (2 points)

 

Which of the following is an application of the principle of moral hazard?

Question 7 options:

	Inappropriate lyrics are available for downloading through the Internet when regulations are not enforced.
	None of the above
	People build homes in areas subject to severe flood damage when federally-subsidized insurance is available.
	Actions by one individual have an impact on innocent bystanders.

Question 8 (2 points)

 

Toll goods are characterized by

Question 8 options:

	alternate (or competitive) use and exclusion not feasible.
	alternate (or competitive) use and exclusion feasible.
	nonrival and exclusion feasible
	joint use and exclusion not feasible.

Question 9 (2 points)

 

The executive budget does not state any kind of policy.

Question 9 options:

	True
	False

Question 10 (2 points)

 

An allotment schedule is

Question 10 options:

	A division of fiscal duties between the House and the Senate.
	A mechanism to reduce agency spending below its budget request.
	A timeline for the budget process.
	A mechanism to keep agency spending in line with the approved budget.

Question 11 (2 points)

 

1. Bain Educational (a private school) operates an elementary school in Big Bucks, Kansas.  It is open to any student in the local school district and the school is financed by a property tax levied by the local school district.  This represents an example of:

 

Question 11 options:

	public provision and private production
	both public and private production
	private provision and private production
	public reduction and private production

Question 12 (2 points)

 

Break-even analysis attempts to determine

Question 12 options:

	the point at which total costs equal total revenues.
	the point at which variable costs equal variable revenues.
	levels of transfer payments.
	levels of grant payments.

Question 13 (2 points)

 

Which of the following arguments is based on the concept of adverse selection?

Question 13 options:

	The U.S. Military needs higher pay to attract the best personnel
	Mosquito abatement is a public good.
	Only the national government can successfully conduct macroeconomic stabilization policies.
	Private medical insurance companies seek to exclude those most likely to need healthcare.

Question 14 (2 points)

 

Internal control standards do not include which of the following?

Question 14 options:

	Use sequentially numbered receipt forms to acknowledge collections
	Separation between operational transactions and accounting record keeping
	Maintain qualified personnel and rotate duties
	Require regular external audit

Question 15 (2 points)

 

The purpose of a financial audit includes all of the following EXCEPT:

Question 15 options:

	Assess legality of transactions
	Evaluate effectiveness of public resource use
	Examine completeness of financial records
	Test internal controls