If $20 Billion Was Spent on a Program Last Year

question 29

Multiple Choice

If $20 billion was spent on a program last year and $21 billion would be required to maintain services at the same level, then a budgeted figure of $20.5 billion would represent

• A)an increase using current services budgeting and a cut using baseline budgeting.
• B)an increase using either current services or baseline budgeting.
• C)a cut using either current services or baseline budgeting.
• D)an increase using baseline budgeting and a cut using current services budgeting.

---

Definitions:

Diminishing Marginal Utility

The principle that as a person consumes more of a product, the satisfaction (utility) gained from each additional unit decreases.

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Substitution Effect

The change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods.

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs.