Which of the Following Is a Characteristic of Zero-Based Budgeting

question 128

Multiple Choice

Which of the following is a characteristic of zero-based budgeting?

• A)It uses the same level of activity as the prior budget period.
• B)It is relatively inexpensive to implement.
• C)It is used mostly by manufacturing companies.
• D)It results in a fresh consideration of the validity of budget amounts.

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Definitions:

Rational Expectations

An economic theory suggesting that individuals make predictions about future economic events using all available information in an unbiased and informed manner.

Discretionary Policies

Economic policies based on the judgment and decisions of policymakers, as opposed to set rules or formulas, often involving changes in government spending or taxation.

Policy Rules

Guidelines or protocols that dictate the actions of an organization or government in specific situations to achieve desired outcomes.

Laffer Curve

A theory that suggests there exists an optimal tax rate which maximizes government revenue without deterring economic growth, demonstrating the trade-off between tax rates and taxable income.