PAC PAC Economic & Fiscal Policy Analysis

Question 1

Which analytical technique compares the total benefits of a policy to its total costs, expressed in monetary terms, to determine net value to society?

Accepted Answer

Cost-benefit analysis

Answer

Cost-effectiveness analysis

Answer

Break-even analysis

Answer

Regression discontinuity design

Question 2

In fiscal policy analysis, 'crowding out' refers to:

Accepted Answer

Government borrowing raising interest rates and reducing private investment

Answer

Reducing government services due to budget cuts

Answer

Overfunding one program at the expense of another in the budget process

Answer

Excluding certain populations from eligibility for public benefits

Question 3

A policy analyst is evaluating a job creation tax credit. Which outcome measure most directly tests whether the credit caused new jobs to be created?

Accepted Answer

The net increase in employment attributable to the credit after accounting for jobs that would have been created anyway

Answer

The number of businesses that claimed the credit

Answer

The total dollar value of tax credits issued

Answer

The change in state unemployment rate in the year the credit was implemented

Question 4

Which budget baseline concept is most commonly used in the US federal budget process to score the cost of new legislation?

Accepted Answer

Current law (CBO) baseline

Answer

Zero-based baseline

Answer

Historical average spending baseline

Answer

Program cost accounting baseline

Question 5

An analyst reviewing a proposed housing subsidy notes that it would reduce housing costs for recipients but increase rents in surrounding areas. This negative effect on non-recipients is called:

Accepted Answer

A negative externality or market spillover

Answer

A multiplier effect

Answer

Adverse selection

Answer

Moral hazard

Question 6

In economic policy analysis, 'deadweight loss' is best defined as:

Accepted Answer

The loss of economic efficiency from market distortions caused by taxes or subsidies

Answer

The administrative cost of collecting taxes

Answer

The portion of program costs not covered by user fees

Answer

Debt payments that exceed program benefits in present value terms