Question

Please indicate if the statement below is true or false.  If the statement is false, indicate and make the  correction to make the statement true.   

7.  From the point of view of the investors, revenue backed bonds are a less risky investment as compared to general obligation bonds both of which can be issued by a State or local government.

True/False____________________

Correction to make true

____________________________________________________________________________________

8. A rationale for utilizing user charges on all residents to finance the cost of construction of a convention center is that this investment in the community gives individuals the option of using it in the future.

True/False ______________________

Correction to make true

__________________________________________________________________________________

9. The fundamental economic characteristic regarding government bonds and some private-activity bonds issued by states and localities is that the federal government does not tax the interest income received by investors, either under the individual or corporate income taxes.

True/False__________________

Correction to make true

____________________________________________________________________________________

10.  A categorical federal grant will restrict the utilization of the funds to a specific purpose or use.

True/False _______________

Correction to make true

____________________________________________________________________________________

11. Policymakers (i.e. politicians) tend to regard fees as less appealing than taxes when debating proposals to increase revenues.

True/False _____________________

Correction to make true

____________________________________________________________________________________

Answer 1

7)False

From the point of view of the investors, revenue backed bonds are a high risky investment as compared to general obligation bonds both of which can be issued by a State or local government.

8) True

(The reason is that user charges are collected through enterprise funds that accounts for local government business activities. It is strong revenue source and benefits can be utilsed in the future.)

9) true

(Federal Government exempts tax on interest income from these bonds. However, State government can charge tax on it, but they usually exempt it.)

10)True

(Categorical funds are for specific purpose like education or nutirtion.)

11)False

Policymakers (i.e. politicians) tend to regard fees as more appealing than taxes when debating proposals to increase revenues.

(The reason is that it will reduce the corruption and will help in generating more revenues.)