MABINI COLLEGES INC.

College of Business Administration and Accountancy

Daet, Camarines Norte

PRELIM EXAMINATIONS
PUBLIC FINANCE
Name: Jefferson A. Tabernilla Schedule: MW 11:30-1:00
Instructor:ReyCarlo Secretario Score: _______________________

General Direction: Fill up the necessary information above. Work efficiently and effectively. Strictly no erasures and
no changing of answers. Do not use abbreviation and initialization.
Identification:

Public Finance 1. Identification of specific financial relationships and functions running between public
administration bodies and institutions (i.e. public sector entities – the state) as one party and in mutual interaction
with other entities of the economic system as the other party (i.e. private entities – households and companies).

Pareto Optimum 2. This exists in an economy when none of the involved entities can improve its position without
worsening another entity’s position.

Macroeconomic Failure 3. It is indicated by instability in the economic system that usually suffers from cyclical
inflation, a high rate of unemployment, low or even negative growth of production or problems in the foreign trade
balance, etc.

Government Failure 4. A specific risk regarding public funding.

Non-optional 5. Economic entities are forced by law to contribute to the joint budget of national or local authorities.
Although the entities must contribute, they are not guaranteed a sufficient amount of public goods.
Non-refundable 6. The “quid pro quo” relationship in other finance or trade transactions does not apply. It is
not certain that the expended means will be returned to the entities at the expected amount.

Non-equivalent7. Although the entities contribute to a joint fund, the benefit from the means expended by
them is not equivalent (adequate) in view of the amount of expended means. Simply put, poor households
contribute little, but the goods provided for them by the public sector are relatively large. With regards to
rich households, the situation is reverse.

Microeconomic Theory 8. Theory states that the existence of public (goods of collective consumption) is one of
the causes of market failure. To eliminate this failure, a fiscal allocation function should be implemented.

Deficit Financing 9. Government spends more money than it receives as revenue.

Budget Surplus10. Implies the government has extra funds. These funds can be allocated toward public debt, which
reduces interest rates and helps the economy.

COMMON GOODS PUBLIC GOODS

CLEAN WATER AIR

Part 2: Give 5 example of each types of Goods
BIODIVERSITY NATIONAL DEFENCE

FISH IN THE SEA SUNSHINE

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PUBLIC SANITATION
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