Discretionary Spending Includes Spending on __________

question 101

Multiple Choice

Discretionary spending includes spending on __________.

• A)food stamps
• B)Medicaid
• C)Medicare
• D)national defense

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Definitions:

Disposable Income

The amount of income left for an individual or household after paying all taxes, available for spending, saving, or investing.

Autonomous Consumption

The level of consumption that occurs when income is zero, showing the basic level of consumption necessary for survival.

Permanent Income Hypothesis

A theory suggesting that people's consumption decisions are based on their long-term income expectations rather than their current disposable income.

Negative Savings

A situation where spending exceeds income, resulting in a deficit rather than savings.