Question

If the law does not specify an amount of budget authority available (e.g., if the amount is determined by specified variable factors), what is the classification of the amount?

1) Fixed amount
2) Variable amount
3) Unspecified amount
4) Cannot be determined

Answer 1

The classification of budget authority amount that is determined by variable factors is a 'variable amount.' It is not fixed and can change over time, unlike mandatory spending which often involves fixed costs that are set by law.

Step-by-step explanation:

If the law does not specify an amount of budget authority available and the amount is determined by specified variable factors, the classification of the amount is variable amount. This is because the budget authority relies on factors that can change and are not constant. In contrast, a fixed amount would be a specific, predetermined amount of budget authority that does not change over time, such as a set annual salary.

In the context of the Federal Budget, mandatory spending, such as Social Security or Medicare, typically involves fixed costs, as these are set by statutory criteria and do not generally vary within the budget period. On the other hand, discretionary spending, which includes items such as military bases or welfare assistance, can vary from year to year and could be seen as more of a variable expense. These costs are debated and determined annually by Congress.