The primary purpose of cost-benefit analysis (CBA) in public policy is to:
a) Maximize government expenditure
b) Compare the costs and benefits of policy options
c) Increase bureaucratic complexity
d) Promote only economic growth
Which of the following is a key component of cost-benefit analysis?
a) Identifying costs and benefits
b) Ignoring future impacts
c) Eliminating stakeholder input
d) Avoiding financial calculations
What is meant by the term “discount rate” in CBA?
a) The reduction of future costs and benefits to present value
b) A special government subsidy
c) A type of sales tax
d) The rate at which policy costs are ignored
Which of the following is NOT considered a benefit in CBA?
a) Increased economic growth
b) Improved public health
c) Increased pollution
d) Higher employment rates
In CBA, indirect costs are those that:
a) Are directly related to the policy’s implementation
b) Arise as secondary effects of the policy
c) Have no impact on decision-making
d) Are ignored in analysis
Which method is used to measure intangible benefits in CBA?
a) Contingent valuation method
b) Direct cost measurement
c) Simple profit-loss analysis
d) Ignoring non-monetary factors
What is the main limitation of CBA in public policy?
a) Difficulty in quantifying social and environmental impacts
b) Its ability to measure all benefits accurately
c) Its reliance on subjective opinions
d) It is never used in policymaking
Which of the following is an example of an opportunity cost in public policy?
a) Choosing to invest in healthcare instead of infrastructure
b) Ignoring inflation
c) Reducing public spending
d) Eliminating all risks
Which tool helps in comparing multiple policy options in CBA?
a) Net Present Value (NPV)
b) Randomized trials
c) Political opinion polls
d) Electoral outcomes
Which of the following is NOT a step in conducting a CBA?
a) Identifying costs and benefits
b) Assigning monetary values
c) Ignoring inflation effects
d) Comparing total costs and benefits
Which of the following is considered an intangible benefit?
a) Improved quality of life
b) Construction costs
c) Increased taxation
d) Salaries of public employees
How does sensitivity analysis improve CBA?
a) By testing how different assumptions affect outcomes
b) By ignoring external factors
c) By eliminating cost analysis
d) By relying only on government estimates
Which of the following is an externality in CBA?
a) Air pollution from a factory
b) Government revenue collection
c) Administrative costs of a policy
d) Official salaries
What is a common challenge in conducting CBA for public policies?
a) Difficulty in quantifying social benefits
b) Excessive ease of calculations
c) Lack of government spending
d) Overestimation of policy failures
Which concept helps to determine the future value of costs and benefits?
a) Time value of money
b) Random cost allocation
c) Political feasibility
d) Bureaucratic influence
Which indicator helps determine whether a policy is financially viable?
a) Benefit-Cost Ratio (BCR)
b) Number of political supporters
c) Number of pages in a policy report
d) Percentage of government employees
How is risk incorporated into CBA?
a) Through probability analysis and scenario planning
b) By ignoring uncertain outcomes
c) By assuming all policies succeed
d) By eliminating financial calculations
What is a sunk cost in CBA?
a) A cost that has already been incurred and cannot be recovered
b) A future expense
c) A variable administrative cost
d) A projected benefit
Which of the following best describes cost-effectiveness analysis (CEA)?
a) Compares costs without monetizing benefits
b) Focuses only on revenue generation
c) Measures public opinion on policies
d) Ignores financial impact
Which economic principle is most relevant to CBA?
a) Marginal analysis
b) Supply chain management
c) Currency exchange rates
d) Marketing strategies
Which factor makes CBA controversial in public policy?
a) Ethical concerns over monetizing human lives
b) Its ability to predict future costs
c) Its reliance on economic data
d) Its use in environmental policies
Which government department is typically responsible for conducting CBA in public policy?
a) Ministry of Finance
b) Ministry of Sports
c) Electoral Commission
d) Press Information Department
Which measure ensures fairness in distributing costs and benefits?
a) Equity analysis
b) Random cost assignment
c) Strict budget cuts
d) Ignoring public opinion
Which of the following is NOT a factor in CBA?
a) Political party popularity
b) Economic impact
c) Environmental sustainability
d) Public health outcomes
How does public participation enhance CBA?
a) By including diverse perspectives in cost-benefit evaluation
b) By reducing transparency
c) By limiting policy choices
d) By increasing government spending
Which technique is used to compare different policy options over time?
a) Present Value Analysis
b) Random Selection Method
c) Population Census
d) Electoral Surveys
Why is CBA useful in public infrastructure projects?
a) It helps determine financial feasibility and long-term benefits
b) It eliminates the need for political approval
c) It ignores future costs
d) It focuses only on private sector profits
