Deck 8: Fiscal Federalism

Question 1

In the Tiebout model, individuals vote with their

A)feet.
B)ballots.
C)hands.
D)political party.

Answer 1

feet.

Question 2

The largest share of expenditures on health are made by the government(s).

A)provisional
B)federal
C)state
D)provincial, territorial, and local

Answer 2

provincial, territorial, and local

Question 3

The Tiebout model assumes that public services are financed by a proportional property tax.

A)True
B)False
C)Uncertain

Answer 3

True

Question 4

Tax effort is normally defined as

A)the economic burden of taxation.
B)the percentage of taxes collected subnationally.
C)the ratio of tax collections to tax capacity.
D)the government's effort to collect taxes.

Question 5

For most federations almost all macroeconomic stabilization comes from governments actively adjusting taxation and spending levels to smooth out slumps and booms.

A)True
B)False
C)Uncertain

Question 6

When did federal transfers as a percentage of provincial and local expenditures reach its peak?

A)1960s
B)1970s
C)1980s
D)1990s

Question 7

A Tiebout model involves

A)perfect information.
B)governments generating no externalities.
C)completely mobile individuals.
D)all of these answer options are correct.

Question 8

The Canada Health Transfer (CHT)and Canada Social Transfer (CST)are matching conditional grants.

A)True
B)False
C)Uncertain

Question 9

Disadvantages of a decentralized system include(s)

A)the lack of ability to redistribute income.
B)intercommunity externalities.
C)forgone scale economies in the provision of public goods.
D)all of these answers are correct.

Question 10

The Tiebout model perfectly describes the real world.

A)True
B)False
C)Uncertain

Question 11

Equalization is the main program to address fiscal disparities across provinces in Canada.

A)True
B)False
C)Uncertain

Question 12

In 2013-14, all provinces except received equalization payments.

A)Newfoundland and Labrador, Saskatchewan, Alberta, and British Columbia
B)Newfoundland and Labrador, Ontario and Quebec
C)Ontario and Quebec
D)Manitoba, Saskatchewan, Alberta, and British Columbia

Question 13

When the federal government gives a grant to a provincial government without restrictions on use, this is known as

A)revenue sharing.
B)a conditional grant.
C)an unconditional grant.
D)an endowment.

Question 14

Net fiscal benefits are

A)when government action is not required to achieve efficiency.
B)the value of publicly provided services minus their cost to the recipient of those services.
C)an economic theory and not present in the real world.
D)all of these answers are correct.

Question 15

Federal transfers as a percentage of federal expenditures are higher now than in the postwar (post World War II)period.

A)True
B)False
C)Uncertain

Question 16

Over the last 100 years, the level of government that has seen the largest increase in its percentage of expenditures is

A)provincial.
B)local.
C)federal.
D)all of these answer options are correct.

Question 17

A federal system consists of one level of government to provide public goods and services.

A)True
B)False
C)Uncertain

Question 18

explores the functions undertaken by different levels of government and the ways in which they relate to each other.

A)Centralization
B)Decentralization
C)Fiscal federalism
D)Federal system

Question 19

The share of total government expenditures made by subnational governments is called the expenditure centralization ratio.

A)True
B)False
C)Uncertain

Question 20

percent of Canadians changed their province of residence in 2013-14.

A)10
B)5
C)1
D)20

Question 21

Why is the Tiebout model not a perfect description of the real world? Despite this fact, why does the model perform well, and why is it considered a good depiction of reality?

Question 22

Advantages of a decentralized system include(s)

A)fostering intergovernmental competition.
B)tailoring government to local tastes.
C)intercommunity externalities.
D)both A and B.

Question 23

Refer to the figure below. Suppose that the initial budget constraint AB is given by the equation G = 150 - c/5, where G is the units of public good and c is consumption. A closed-ended matching grant up to 100 units of public good is proposed. If the slope of line segment AD is -2, write the equation of the new budget constraint after a closed-ended matching grant.

Question 24

The flypaper effect causes money to move from the sector it initially hits to stick somewhere else.

A)True
B)False
C)Uncertain

Question 25

More than half of federal grant outlays go for programs relating to post-secondary education, health, and _.

A)roads
B)defence
C)social assistance
D)international aid

Question 26

The Tiebout model can be summarized as individuals voting with their hands.

A)True
B)False
C)Uncertain

Question 27

Refer to the figure below that illustrates a matching grant. Suppose that there is a change to a closed-ended matching grant. Modify the figure below to reflect the change from a matching grant to a closed-end matching grant.

Question 28

The measures the dollar cost of the incremental congestion created by each new member to a community.

A)marginal cost of public funds
B)community tax
C)club membership fee
D)marginal congestion cost

Question 29

In Tiebout's model, the tax can vary across communities.

A)True
B)False
C)Uncertain

Question 30

The federal government and provinces committed to reducing regional economic disparities in the

A)War Measures Act, 1914.
B)British North America Act, 1867.
C)Constitution Act, 1982.
D)Canadian Bill of Rights, 1960.

Question 31

Equalization is the main vehicle for addressing fiscal disparities across provincial governments. Briefly describe the adjustments introduced to the program in Budget 2007. Do you think these changes to the equalization program were a good idea? Why or why not?

Question 32

Discuss the disadvantages of a decentralized system. If you were making a recommendations to the government, what are some of the potential issues of a decentralized system you would identify?

Question 33

The Tiebout model offers a quasi-market solution to public good production and community development. What are some drawbacks to this model?

Question 34

A migration response to differences in net fiscal benefits is called fiscally induced migration.

A)True
B)False
C)Uncertain