Question : What is the difference between mandatory and discretionary spending?
Option 1: Mandatory spending is required by law, while discretionary spending is optional
Option 2: Discretionary spending is required by law, while mandatory spending is optional
Option 3: Mandatory spending is related to national defense, while discretionary spending is related to education
Option 4: Discretionary spending is related to national defense, while mandatory spending is related to social welfare programs
Correct Answer: Mandatory spending is required by law, while discretionary spending is optional
Solution : The correct answer is (a). Mandatory spending is required by law, while discretionary spending is optional.
Mandatory spending refers to government expenditures that are required by law and are not subject to annual appropriations or discretionary decision-making. These spending programs are typically established through legislation and include entitlement programs such as Social Security, Medicare, and Medicaid. The government is obligated to make these payments to eligible individuals or entities based on predetermined eligibility criteria and benefit formulas.
Discretionary spending, on the other hand, is spending that is subject to annual appropriations and is determined through the discretionary decision-making process. It includes funding for various government agencies, departments, programs, and initiatives, such as defense, education, infrastructure, research, and foreign aid. The allocation of discretionary spending is determined by the government's priorities and can be adjusted from year to year through the budgeting process.
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