If a State Constructs Its Budget by Making Small Adjustments

question 1

Multiple Choice

If a state constructs its budget by making small adjustments to the previous year's expenditures while avoiding a comprehensive review of requested funds, it is engaging in which type of budgeting?

• A) line-item budgeting
• B) performance budgeting
• C) incremental budgeting
• D) capital budgeting

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Definitions:

Junk Bond

A high-yield bond with a lower credit rating, reflecting a higher risk of default but offering potentially greater returns.

High-Risk Bond

A bond with a lower credit rating, indicating a higher risk of default, but offering higher potential returns to compensate for this risk.

High Yields

Bonds that offer higher interest rates because they have lower credit ratings, implying greater risk of default.

Oligopolies

Markets dominated by a small number of large firms, leading to limited competition.