When the government must pay for fighter planes based on commitments made five years previously the spending the spending is called________________?
Correct answer: B. uncontrollable
- A. discretionary
- B. uncontrollable
- C. balanced
- D. unavoidable
Explanation
Spending required because of commitments made in earlier years is generally called uncontrollable or mandatory spending, since the government cannot freely cancel it in the current budget. Discretionary spending can instead be adjusted through current decisions.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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