Public Finance Fundamentals Quiz

The study of government revenue and expenditure, financial administration, auditing, and control, and their impact on society and the economy.

Government actions to control inflation and stimulate economic growth through tax rates and spending.

Increasing government spending and decreasing taxes to boost economic activity and reduce inflation.

Decreasing government spending and increasing taxes to decrease economic activity, usually to rein in inflation.

When government spending exceeds its revenue.

When government revenue exceeds its spending.

The management of the financial resources and accounts of a government organization.

Public finance involves government resource management (taxes, borrowing), while private finance focuses on individual/business profit or satisfaction.

Governments can impose taxes or print money, while individuals cannot.

Public spending decisions are based on social goals like full employment, not just profit.

Governments prioritize long-term projects with potential long gestation periods, unlike individuals who prioritize short-term gains.

Governments may spend on services that don't generate revenue (e.g., sanitation).

People usually focus on current needs, while governments consider long-term community well-being.

Governments plan for the long-term, even if it means current-generation sacrifices.

Public revenue (taxes collected by the government) is more flexible than individual income.

Governments can borrow money from global institutions (e.g., IMF). Individuals cannot.

The government's role in redistributing wealth from richer individuals to poorer individuals, aiming to reduce income inequality.

An economic system that combines elements of capitalism and socialism, where the government plays a role in regulating markets and redistributing wealth.

A good or service that is non-rivalrous and non-excludable, meaning everyone can consume it without diminishing its availability for others.

One person's consumption of a good does not prevent others from consuming it.

It's impossible to prevent anyone from enjoying a public good, even if they don't pay for it.

When the free market fails to allocate resources efficiently, resulting in under-provision of certain goods or services.

Governments intervene in market economies to provide public goods and address market failures.

The government plays a role in regulating markets and ensuring fair and efficient allocation of resources, especially for public goods.

Public goods include streetlights, national defense, clean air, and basic education.

The government uses various tools like regulation, taxes, subsidies, and public provision to address market failures.

A situation where one party in a transaction has more information than the other, leading to potential disadvantages for the less informed party.

Making poor decisions due to incomplete or imperfect information about risks or quality, often caused by asymmetric information.

Government actions to influence the economy, such as providing welfare programs, imposing taxes, or regulating markets.

A cost or benefit imposed on a third party by an economic transaction, not reflected in the market price.

A benefit imposed on a third party by an economic transaction.

A cost imposed on a third party by an economic transaction.

The forces of supply and demand that determine prices and resource allocation in a market economy.

The government's role in safeguarding individual rights and property, like protecting personal freedoms and enforcing contracts.

How resources are distributed for production in an economy, deciding what goods and services are made.

Goods that are non-excludable (everyone benefits, even if they don't pay) and non-rivalrous (one person's use doesn't reduce another's).