Public Finance Sample Exams
It is generally very easy for professors to write essay or discussion questions reflecting the
material emphasized in class and in assigned readings. The exam questions and problems
provided here are more objective, emphasizing
Personal Taxation and Behavior
1. Social savings is
A) just another way of defining security.
B) the sum of government and private savings.
C) government savings only.
D) defined by higher rates of interest for the government.
1. Public goods are characterized by
C) the sum of the MRSs equaling MRT.
D) all of the above.
2. Market mechanisms are unlikely to provide
B) nonrival goods effic
Government and the Market for Health Care
1. The highest percentage of uses of health care funds in the US for 2004 was
B) hospital care.
C) home health care.
D) nursing home care.
2. There are two forms of h
1. Majority rule voting
A) requires a simple majority greater than half the voters.
B) requires that rules of order be established.
C) does not occur in democracies.
D) can only be applied to single issues.
Chapter 03 - Financial Instruments, Financial Markets, and Financial Institutions
Financial Instruments, Financial Markets,
and Financial Institutions
In this chapter the financial system is surveyed in three steps: 1) financial
1. Reducing output from the privately optimal level to the socially optimal level will
A) cause a loss of consumption to consumers.
B) reduce marginal damages.
C) reduce the production costs.
D) cause all of the abo
Chapter 07 - The Risk and Term Structure of Interest Rates
The Risk and Term Structure of Interest Rates
In this chapter students are introduced to the three factors that affect bond yields: default
risk, taxes, and maturity. Th
1. A pay-as-you-go system means
A) you pay for your dinner as you go to the table to eat.
B) current working citizens pay for current retired citizens.
C) there is no need for taxes since current workers pay for
Chapter 05 - Understanding Risk
This chapter covers how to measure risk and assess whether it will increase or decrease.
It also develops an understanding of why changes in risk lead to changes in the demand
Chapter 08 - Stocks, Stock Markets, and Market Efficiency
Stocks, Stock Markets, and Market Efficiency
The goal of this chapter is to try to make sense of the stock market, to show what
fluctuations in stock value mean for indiv
Chapter 02 - Money and the Payments System
Money and the Payments System
As indicated by the title, this chapter covers money and the payments system, which
includes checks and electronic payments. The implications of new techno
Chapter 16 - The Structure of Central Banks: The Federal Reserve and the European Central Bank
The Structure of Central Banks:
The Federal Reserve and the European Central Bank
In this chapter we examine two important central b
Chapter 04 - Future Value, Present Value, and Interest Rates
Future Value, Present Value, and Interest
This chapter continues the exploration of interest rates using the concept of present value and
future value. The conce
Chapter 19 - Exchange-Rate Policy and the Central Bank
Exchange-Rate Policy and the Central Bank
In this chapter we turn to a discussion of exchange rate regimes and consider the link
between a countrys exchange rate policy and
Chapter 06 - Bonds, Bond Prices, and the Determination of Interest Rates
Bonds, Bond Prices, and the Determination of Interest
If we want to understand the financial system, particularly the bond market, we must
Chapter 01 An Introduction to Money and the Financial System
An Introduction to Money and the Financial System
Chapter 1 introduces students to the five parts of the financial system and to the five core
principles that will be
Chapter 15 - Central Banks in the World Today
Central Banks in the World Today
Despite the constant presence of central banks in the news and their unprecedented power, most
people only have a vague idea of what they are and wh
Tools of Normative Analysis
1. The absolute value of the slope of the production possibilities curve is the
A) marginal rate of substitution.
B) contract curve.
C) offer curve.
D) Engel curve.
E) marginal rate of transformation.
Chapter 17 - The Central Bank Balance Sheet and the Money Supply Process
The Central Bank Balance Sheet
and the Money Supply Process
In this chapter we develop an understanding of how the central bank interacts with the
Chapter 09 - Derivatives: Futures, Options, and Swaps
Derivatives: Futures, Options, and Swaps
This chapter provides an introduction to derivatives, and examines both their uses and
Reading this chapter will prepare stud
Chapter 21 - Output, Inflation and Monetary Policy
Output, Inflation and Monetary Policy
Everyone is preoccupied with monetary policy, from traders to consumers to politicians.
The objective of this chapter is to understand flu
Chapter 18 - Monetary Policy: Stabilizing the Domestic Economy
Stabilizing the Domestic Economy
The purpose of this chapter is to study three different links: the link from the central
banks balance sheet to it
Chapter 10 - Foreign Exchange
This chapter provides an introduction to foreign exchange rates and exchange markets,
helping students to understand how they are determined and what accounts for their
1. Vouchers allow students to
A) get free lunches at public schools.
B) go to public schools at reduced rates.
C) receive discounts on school supplies like pens and paper.
D) all of the above
E) none of the above
Chapter 22 - Understanding Business Cycle Fluctuations
Understanding Business Cycle Fluctuations
The objective of this chapter is to use the framework developed in the last chapter to
understand fluctuations in output and infla
Chapter 12 - Depository Institutions: Banks and Bank Management
Depository Institutions: Banks and Bank Management
This chapter examines the business of banking, looking at where depository institutions
get their funds and what
Chapter 13 - Financial Industry Structure
Financial Industry Structure
The first half of this chapter considers current trends in the banking industry, including
the tendency toward consolidation with nondepository institutions
Chapter 11 - The Economics of Financial Intermediation
The Economics of Financial Intermediation
In theory, the market system may seem neat and simple, but in reality economic growth is
a messy, chaotic thing. Problems with the
The Personal Income Tax
1. AGI is
A) found by subtracting certain business expenses from H-S income.
B) found by subtracting exemptions from taxable income.
C) not used in modern tax policy.
D) none of the above.
2. The l