Question 1

Fiscal policy consists of taxation and what other governmental activity?
A) representation
B) spending
C) elections
D) recessions

Accepted Answer

Fiscal policy consists of two main components: taxation and government spending.

Question 2

Articulated by his book published in 1936, the theory that government can use the budget to steer the economy can be attributed to ______.
A) V. O. Key
B) Paul Volcker
C) John Maynard Keynes
D) Aaron Wildavsky

Accepted Answer

The theory that government can use the budget to steer the economy is known as Keynesian economics, named after the British economist John Maynard Keynes, who first articulated the concept in his book "The General Theory of Employment, Interest and Money" published in 1936.

Question 3

Which of the following types of legislation creates programs and limits the amount of money to be spent managing them?
A) rescissions
B) earmarks
C) appropriations
D) authorizations

Accepted Answer

Authorizations create programs and set limits on the amount of money that can be spent on them.

Question 4

The national debt is ______.
A) government surplus
B) government outlays
C) a deficit accumulated over time
D) the fiscal year budget

Accepted Answer

The national debt refers to the total amount of money owed by the government from past budget deficits (when government spending exceeds revenue). It is not a government surplus, fiscal year budget, or government outlays.

Question 5

Government taxation and spending is called ______.
A) fiscal policy
B) zero-base budgeting
C) incrementalism
D) compensatory economics

Accepted Answer

Fiscal policy refers to the government's use of taxation and spending to regulate the economy. Zero-base budgeting, incrementalism, and compensatory economics are all budgeting and economic theories, but they do not encompass the entire range of government taxation and spending.

Question 6

The relationship between the federal budget and the national economy is ______.
A) reciprocal, because the budget affects the economy and the economy shapes the budget
B) unilateral, because only the budget affects the economy
C) unilateral, because only the economy affects the budget
D) autonomous, because neither the budget nor the economy affects the other

Accepted Answer

The relationship between the federal budget and the national economy is reciprocal, as they both have an impact on each other. The budget influences the economy through government spending and taxation, while the economy affects the budget by determining the amount of revenue generated and the demand for government services.

Question 7

Top-down budgeting differs from bottom-up budgeting in that the former ______.
A) examines the big picture
B) emphasizes incrementalism
C) focuses on the size of each agency's piece of the whole compared to what other agencies receive
D) focuses on changes as opposed to the whole budget at once.

Accepted Answer

Top-down budgeting focuses on examining the big picture, such as overall spending and priorities, and then allocating funds to individual agencies or programs. This is in contrast to bottom-up budgeting, which starts at the agency or program level and builds up to the overall budget.

Question 8

Management by objectives and zero-base budgeting are ______.
A) techniques to reform incrementalism
B) budget appropriations methods
C) methods of increasing legislative power
D) types of legislative authorization

Accepted Answer

Both management by objectives and zero-base budgeting are techniques meant to counter incrementalism, which is the tendency to make small changes to past practices rather than starting from scratch or re-evaluating the entire budget and goals. Therefore, A is the correct choice. B, C, and D are not relevant to describing these techniques.

Question 9

The "rule of anticipated reactions" relates to the adaptation of budget estimates to appease which entity's interests?
A) the public's
B) Congress's
C) bureaucrats'
D) OMB's

Accepted Answer

The "rule of anticipated reactions" refers to the idea that budget estimates must be adapted to appease Congress's interests. This involves predicting how Congress will react to certain fiscal decisions and adjusting the budget accordingly to gain Congressional support.

Question 10

The classic question of basic budgeting, "On what basis shall it be decided to allocate x dollars to activity A instead of activity B?" can be attributed to whom?
A) John Maynard Keynes
B) V. O. Key
C) Alan J. Abramson
D) Alfred Kahn

Accepted Answer

The classic budgeting question of allocating funds between different activities is often attributed to political scientist V.O. Key, who wrote about it in his book "Politics, Parties and Pressure Groups" (1942). While Keynes is known for his economic theories, Abramson is known for his work in the field of nonprofit management, and Kahn is known for his work in regulatory policy, none of them are specifically associated with this budgeting question.

Question 11

Bottom-up budgeting differs from top-down budgeting in that the former ______.
A) looks at the size of the budget deficit
B) looks at the overall picture
C) emphasizes incrementalism
D) looks at the budget's role in macroeconomic policy

Accepted Answer

Bottom-up budgeting starts with identifying the needs and priorities of specific programs and departments and incrementally builds up the budget. It emphasizes a more detailed and participatory approach compared to top-down budgeting, which starts with an overall budget limit set by higher authorities and then allocates funds to different programs and departments based on their perceived importance. Bottom-up budgeting enables more effective resource allocation and responsiveness to local needs, but it can also lead to higher administrative costs and difficulties in coordinating different activities. Options A, B, and D all relate to macro-level considerations or outcomes that can influence both bottom-up and top-down budgeting.

Question 12

The president prepares the overall budget, but who oversees the federal budget appropriations process?
A) states
B) the president
C) agencies
D) Congress

Accepted Answer

The federal budget appropriations process is overseen by Congress, specifically the House of Representatives and the Senate. They have the power of the purse, which means they control how federal funds are spent. While the president proposes a budget, it is ultimately up to Congress to approve and allocate the funds.

Question 13

Prior to 1921, who provided the primary leadership during the federal budget process?
A) the judiciary
B) the president
C) Congress
D) agencies

Accepted Answer

Prior to 1921, the primary leadership during the federal budget process was provided by Congress. This changed with the enactment of the Budget and Accounting Act of 1921 which established the Bureau of the Budget (now known as the Office of Management and Budget) within the Executive Office of the President, giving the president a greater role in the budget process.

Question 14

Creating a biennial budget and enacting a balanced-budget constitutional amendment ______.
A) were processes implemented to reform the budget process
B) are potential solutions for reforming the budgetary process
C) have been dismissed by academics as naïve ideas
D) have been dismissed by Congress as naïve ideas

Accepted Answer

Creating a biennial budget and enacting a balanced-budget constitutional amendment are both potential solutions that have been proposed for reforming the budgetary process. While they may not have been fully implemented or embraced by some, they have been suggested as ways to improve the budget process.

Question 15

The Program Assessment Rating Tool and zero-base budgeting are ______.
A) budget reform techniques
B) budget appropriations methods
C) methods of increasing legislative power
D) types of legislative authorization

Accepted Answer

The Program Assessment Rating Tool (PART) and zero-base budgeting (ZBB) are both budget reform techniques aimed at improving the efficiency and effectiveness of government spending. PART is a tool used to evaluate the performance of federal programs, while ZBB involves starting the budgeting process from scratch and requiring every program to justify its funding level. Both techniques are intended to result in better allocation of resources and cost savings.

Question 16

The Federal Reserve manages the money supply, a responsibility also known as ______.
A) compensatory economics
B) fiscal policy
C) monetary policy
D) zero-base budgeting

Accepted Answer

The responsibility of managing the money supply is called monetary policy, which involves actions taken by the Federal Reserve to influence the availability and cost of money in the economy. Option A is not a term used to describe the Federal Reserve's role, option B refers to the government's use of taxes and spending to manage the economy, and option D is a budgeting technique used by organizations to allocate resources.

Question 17

What landmark legislation revolutionized the federal budget process and increased presidential power?
A) the Impoundment Control Act
B) the Hatch Act
C) the Budget and Accounting Act
D) the Government Performance and Results Act

Accepted Answer

The Budget and Accounting Act of 1921 established the modern federal budget process and gave the president greater control over the budget. It required the president to submit an annual budget proposal to Congress, established the Bureau of the Budget (later the Office of Management and Budget), and gave the president the authority to impound funds in certain situations. This legislation revolutionized the federal budget process and increased presidential power. The Impoundment Control Act of 1974, option A, was passed in response to abuses of the impoundment power by President Nixon and limited the president's ability to withhold funds that had been appropriated by Congress. The Hatch Act, option B, restricts political activity by federal employees. The Government Performance and Results Act, option D, required federal agencies to set goals and measure progress, but did not significantly impact the federal budget process or presidential power.

Question 18

According to the text, the federal budget has the largest effect on ______.
A) state budgets and the economy
B) the policy process and the economy
C) the policy process and international markets
D) state budgets and local budgets

Accepted Answer

The federal budget significantly influences the policy process by determining funding levels for various programs and initiatives, and it impacts the economy through government spending, taxation, and fiscal policy.

Question 19

Because the term is so loaded and when forecasted from government officials can make policymaking difficult, Alfred Kahn, advisor on inflation in the Carter administration, used the word banana in a press conference instead of which word?
A) budget deficit
B) appropriation
C) recession
D) government outlays

Accepted Answer

The word Alfred Kahn substituted was "recession".

Question 20

What budget reform is associated with multiyear planning to connect annual budget objectives to long-range plans?
A) management by objectives
B) zero-base budgeting
C) Planning-Programming-Budgeting System
D) sequestration

Accepted Answer

Planning-Programming-Budgeting System (PPBS) is a budget reform that emphasizes multiyear planning and connects annual budget objectives to long-range plans. PPBS is a strategic planning and management tool that aims to improve decision-making by aligning the budget process with long-term goals and objectives. Management by objectives (A) is a performance management approach that focuses on setting specific objectives and measuring progress toward them. Zero-base budgeting (B) is a budgeting method that starts from scratch each year and requires agencies to justify all of their expenditures, rather than simply adjusting the previous year's budget. Sequestration (D) is a process of automatic, across-the-board spending cuts that occurs when Congress and the President fail to agree on a budget deal that meets statutory budget caps.

Quiz 11: Budgeting

Fiscal policy consists of taxation and what other governmental activity?

Articulated by his book published in 1936, the theory that government can use the budget to steer the economy can be attributed to ______.

Which of the following types of legislation creates programs and limits the amount of money to be spent managing them?

The national debt is ______.

Government taxation and spending is called ______.

The relationship between the federal budget and the national economy is ______.

Top-down budgeting differs from bottom-up budgeting in that the former ______.

Management by objectives and zero-base budgeting are ______.

The "rule of anticipated reactions" relates to the adaptation of budget estimates to appease which entity's interests?

The classic question of basic budgeting, "On what basis shall it be decided to allocate x dollars to activity A instead of activity B?" can be attributed to whom?

Bottom-up budgeting differs from top-down budgeting in that the former ______.

The president prepares the overall budget, but who oversees the federal budget appropriations process?

Prior to 1921, who provided the primary leadership during the federal budget process?

Creating a biennial budget and enacting a balanced-budget constitutional amendment ______.

The Program Assessment Rating Tool and zero-base budgeting are ______.

The Federal Reserve manages the money supply, a responsibility also known as ______.

What landmark legislation revolutionized the federal budget process and increased presidential power?

According to the text, the federal budget has the largest effect on ______.

Because the term is so loaded and when forecasted from government officials can make policymaking difficult, Alfred Kahn, advisor on inflation in the Carter administration, used the word banana in a press conference instead of which word?

What budget reform is associated with multiyear planning to connect annual budget objectives to long-range plans?