Question

Modified True/False

Please indicate if the statement below is true or false.  If the statement is false, indicate and make the correction to make the statement true.   Each question is worth 5 points (there is a bonus).  Partial answer (that is, the statement is false, but your correction is wrong) will get ½ credit.

1.  General obligation bonds are less restrictive than revenue backed bonds with few limitations regarding the amount that can be issued.

True/False       ____________________                                

Correction to make true ___________________________________________________________________________________

2.   When issuing revenue backed bonds, receipts from all issuing governments sources are pledged to pay the interest and principal back to the bond purchasers.

True/False  _______________________

Correction to make true

____________________________________________________________________________________

3.  The theory of tax expenditures is what drives the rationale for investors to purchase State/local bonds of either type (general obligation/revenue backed)

True/False________________________

Correction to make true

___________________________________________________________________________________

4.  The Federal American Recovery Act, signed into law by President Obama, provided a mechanism that achieved the goals of federal grant policy by correcting for externalities and providing for a macroeconomic stabilizing mechanism.

True/False _____________________

Correction to make true

____________________________________________________________________________________

5. Intergovernmental grants do not provide a mechanism in which you can effectively substitute the granting government’s tax revenue for that of the recipient government.

True/False ___________________

Correction to make true

____________________________________________________________________________________

6.  Financing government expenditure through a user fee is similar to tax financing because in both revenue streams there is always a direct relationship between the amount of payment and the level of service received.  

True/False ________________

Correction to make true

____________________________________________________________________________________

Answer 1

1.True:General obligation are less restrictive than revenue bonds .Compared to the revenue backed bonds general obligation bonds are more safer than the revenue backed bonds.They have higher credit ratings than the revenue backed bonds.

2.True:when issuing revenue backed bonds,receipts from all issuing hovernment sources are pledged to pay the interest and principal back to the bond purchasers.Revenue bonds are backed by specific revenue sources such as income from tolls,hospitals and public transport services.

3.True:The theory of tax expenditure explains different provisions of the tax code such as the exclusions,deductions etc that benefits the activities of tax payers.

4.False
The primary objective of the Federak Americsn Recovery Act,signed in to law by Obama to save the existing jobs and to reduce unemployment in the economy. The other objectives was
to provide temporary relief programmes.

5.True:Intergovernmental Grant's acts as an intermediary between the flow of grants from federal government to local or state government.

6.False:Financing government expenditure through a user revenue is not similiar to tax financing.Through user fee people can avail additional benefits from the government.For example toll or road tax.Tax financing is used as a subsidy for redevelopment ,infrastructure and other community oriented prograames.