WYRLO B.

DELA CRUZ, LPT

Master in Public Administration

MPA 212 (FISCAL ADMINSTRATION)

Midterm Exam

Prof. Ricky Loterte

1. What is a financial system? Identify the basic services essential for smooth functioning of an

economy

Financial system channels the funds from savers and spenders. It allows the saved nets to lend to

the spenders net. Essential basic services for smooth functioning economy are those of banking,

capital, and market.

2. Explain the role of institutions and governance in supporting and sustaining economic growth

In the Marx’s critique, his observation was that, the society is moved by economy and not by the

culture as spirit. Economy then moves society. Governance how people manage public resources,

people, and government itself. Economy circulates to two and more entities (people and market).

Economy is everywhere. It is present in everywhere that has trade-offs. It is important in everyday

life of citizen most especially, it talks about managing of resources. Governance therefor has

immense role in this. It can regulate through policy. Economic sphere as can be contextualized to

micro and macro, governance has something to do in proposing a law beneficial the general welfare

of citizen. Example of this was during the 19th Century, when capitalist class reign in western

civilization over the working class. In effect, the capitalist became richer and the working class

became poorer. The capitalist had its autonomy and could have operated without any check from

the state. By that, the state realized they had something to do with it. They proposed law that will

interfere and guarantee the well-being of the general welfare of working class. They proposed

labour laws in connection to capitalist and working class. As such, institutions such as different

agencies can be useful in case.

3. Discuss the main purpose of fiscal policy. How the government generates funds in the country?
 In general, fiscal is bound in managing government expenditures, government decision making on

treasury regarding on revenue, and allocation of taxes. Likewise, fiscal policy rests on mobilization

of resources, employment generation, increasing national income, reduction of inequalities of

income and wealth of the country, reducing the deficit in the balance of payment and increasing

of national income. Through these instruments; budget, taxation, public expenditures and public

debt, the government is able to generate funds. In budgeting, government identifies what are the

priorities of the nation, such as national and local projects across various agencies. The power of

taxation then as inherent power of the state collects taxes to the people and institutions and

circulations that become budget of the country. In fiscal policy, government determines its

expenditures to the public including the internal and external borrowings. This affects the income

generation of the country.

4. Identify broad characteristics of rapidly growing developing countries. State the relationship

between the rich and poor countries dichotomy.

Japan, Scandinavian Countries (Denmark, Norway, and Finland) America and Europe have been

notable fast growing developing countries. Undeniably, these countries are globally competitive

in economy. What is only seen to them are their sustainability in the near future-consider as

extrinsic qualities of these nations. On one hand, we may entertain the fact that, most of third world

countries have always and there is indeed a prevalence of violence against human rights. Most of

third world countries do not recognize human rights. On the other hand, they become growing

developing countries because of capacity to knowledge management system. Country like of Japan

had pioneered knowledge managements system where all knowledge such as tacit and explicit

knowledge has documented as an asset in management both in private and public sectors.

Knowledge management is current tool in Japan is included public management specially, it

captures the undocumented knowledge of an employee. In effect, it generates more knowledge

beneficial to the community (see Takeuchi Model of Knowledge Management).

5. Economic growth, poverty alleviation, and environmental sustainability are three primary goals

of development. Explain how these goals intrinsically connected to one another.

Economic growth is measured of Gross Domestic Product (GDP) as it is country’s entire economic

output. This has impact to country’s productivity level. It is safe to say that economic growth has
something to do with way of living of citizens. For example, contributory to national economy

those of employed member of each family. Let’s assume all is employed. This says everyone has

participation to economic landscape, in effect, direct implication to economic development. But at

the same time, given this assumption, if poverty level is critically alleviated there will economic

growth deficiency. One factor of this is that, employment and life citizen are catalyst in order for

economic growth to be determined. One cannot assume of economic growth without direct

correspondence to the way of life such as standard way of living of citizen. Decent salary, equal

opportunity of work, health, shelter, and education, purchasing, access to basic needs of citizen are

the realization of economic capability of citizen. When poverty is present, economic development

is unstable. Economic growth mirrors daily and ordinary life of citizen. If poverty rate is

increasing, economy fluctuates. But such economic status, whether growing or fluctuating, is

temporary if environmental sustainability will be at risk. If all natural resources such as those of

renewable and non-renewable resources will failed to be managed. It affects the daily circulation

of economy and ordinary life of citizen as resource of foods, oil and mineral that we use for trade

off. The more that we lose natural resources will affect and make the people suffer.