Sample Multiple Choice Questions for UP (Undergraduate) Students (Urban Finance)

1. Which one of the following is not an element of the argument in favor of borrowing in a strong
growing economies?
a. The amount needed for the expenditure is too large to rise from current resources
b. The infrastructure needed to accommodate future growth is needed today
c. The debt will have used for recurrent budget such as employee salary
d. To ensure intergenerational equity
2. Which one of the following is the major source of finance for infrastructure investment currently in
Ethiopia?
a. Borrowing from banks (foreign or domestic) b. Tax revenues
c. Issuance of equities and bonds d. Public Private Partnership
3. Which one of the following is false about capital market securities?
a. It facilitates the sale of long-term debt securities by deficit units to surplus units.
b. It has relatively low degree of liquidity than money market securities
c. It tends to have a low expected return than money market securities
d. It is less riskier than money market securities
4. Which one of the following is not an element of Arguments “Pay–As–You–Go” (not borrowing)?
a. No interest expense is incurred
b. Debt capacity is reserved for other possibly more important future projects
c. Future users/taxpayers have no say on today’s decision
d. Over-commitment of future resources if the debt used for productive projects
5. Which one of the following is not a source of finance for infrastructure investment?
a. Borrowing from banks (foreign or domestic) b. Tax revenues
c. Issuance of equities and bonds d. International aid
6. Which one of the following is true about money market securities?
a. It facilitates the sale of long-term debt securities by deficit units to surplus units.
b. It has relatively low degree of liquidity than capital market securities
c. It tends to have a low expected return than capital market securities
d. It is more riskier than capital market securities
7. A type of financial support where CG often invest in physical facilities that become part of the
capital stock of LGs refers to:
a. Loans d. Capital investment
b. Tax credit e. Shared Taxes
c. Grants
a. Grants
8. Which one of the following is not an element of taxes on income for local governments?
a. Separate local income taxes b. Surcharge on national income tax
c. A tax on profession d. Massive personal taxes
9. Which one of the following is not the interpretation of local taxation?
 a. Taxes which municipalities impose by their own legislation and which they assess or collect;
b. Taxes levied under national legislation but with tariffs determined by municipalities
c. Taxes which are levied and administered by CG but whose proceeds are given to, shared with, or
surcharged by municipalities.
d. Tax levied by Regional Government but tariffs determined by national government
10. Which one of the following choice is true about general government obligation loan?
a. Government uses the project revenues to support the debt service payments
b. Government owns and operates the project itself
c. Most projects built by the loan money is revenue generating
d. The government issues the debt in the name of the project