Question

1. Governments may have a budget surplus, which allows them the flexibility to put money into a(n) ______________ to be used when budget shortfalls occur.

Investment Account

Budget Reserve

Slush Fund

Holding Account

2. A cash flow problem occurs when the amount of revenue available is not sufficient to cover a media expenditure. Barring any unforeseen occurrences, cities do not tend to have a cash flow problem because they know when tax collections are due.

True

False

3. In the Economic Order Quantity Formula: P=b(T/c) + vT +i(c/2), the c stands for:

Predicted revenue

Category of funding

Size of transfer

Taxed income

4. Risk management incorporates all these fundamental elements EXCEPT:

Mission Identification

Vision Implementation

Risk and Uncertainty Assessment

Risk Financing

5. Cutback management is implementing cost-cutting reductions and resources while attempting to maintain services at their current level. Cutbacks are a result from five things problem depression, erosion of the economic base, inflation, taxpayer revolt, and __________________.

Limits to Growth

Financial Allocations

Administrative Change

Sunsetting Programs

Answer 1

2) The given statement is TRUE.

An important job for any govt. whether at national, state or local level, is to determine how much money is needed at a particular point of time to run the administratiion as well as to make all the public expenditures. Expenditures must be eqaul to revenues at the end of a fiscal year. If that doesnt happen then cash flow problem arises. the cash flow problem arises when the revenue earned is not enough to meet teh immediate expenditures. However, the city administrations generally do'nt tend to have a cash flow problems because they know beforehand when and how much revenue in the form of tax collections is due for a fiscal year, except in certain unforeseen happenstances (like the present Covid crisis of 2020 which has thrown the entire govt budget and spending into a jeopardy). Since, in normal times the cash flow is certain for a city administration, it can time & match its expenditure with its revenue.

3)  In the Economic Order Quantity Formula: P=b(T/c) + vT +i(c/2), the c stands for :- Size of transfer

Once the govt has determined the funds available for investments, the analysts can use the EOQ formula to determine the cash position of the govt.In this approach an analyst weighs carrying cost which is represented by the foregone earned interest against the total cost of the transaction.This model infers that the govt incurs an opportunity cost for fro holding rather than investing idle cash. This model recognizes that each bank transaction involves an administrative cost to the govt. If the govt has to make money by investments of idle cash, more transactions (i.e. transfer of securities to cash) require a higher amt of cash to invest. Smaller govt.s tend to hold certain amt of days expenditures as cash.

4) Risk management incorporates all these fundamental elements EXCEPT:  Vision Implementation

Risk management is all about ascertaining the cost of risk ( the cost associated with loss & uncertainty). As a result its necessary for the administrative oficials to be proactive in managing risk.The risk managers work in very close association with the finance dept. The Risk management include :- mission identification, risk measurement, risk control in the form of Risk and Uncertainty Assessment, Risk Financing, & program administration.

5) Cutback management is implementing cost-cutting reductions and resources while attempting to maintain services at their current level. Cutbacks are a result from five things problem depression, erosion of the economic base, inflation, taxpayer revolt, and Limits to Growth.

1) Investment Account