10 Questions
Describe the concept of zero-based budgeting and list two advantages and two disadvantages of this budgeting method.
Zero-based budgeting (ZBB) is a budgeting method where every expense must be justified from scratch, starting with a 'zero base' for each budget cycle, rather than basing it on the previous year's budget. Two advantages of ZBB are cost efficiency and resource allocation, while two disadvantages are time consuming and complexity.
What is a balanced budget and how does it differ from a surplus budget and a deficit budget?
A balanced budget occurs when revenues are equal to or greater than total expenses. A surplus budget is when income or revenue exceeds expenditures, while a deficit budget occurs when expenses exceed revenue.
Explain the concept of consumer spending and its significance in the economy.
Consumer spending is all spending on final goods and services for current personal and household use. It is a key driving force in the economy, and investors, businesses, and policymakers closely follow published statistics and reports on consumer spending to help forecast and plan investment and policy decisions.
What is the value proposition budgeting approach and how does it allocate resources?
Value proposition budgeting is a strategic approach to allocating resources based on the perceived value that different activities or projects bring to a business or organization. It allocates resources based on the perceived value of activities or projects.
List and define the three types of budget: balance budget, surplus budget, and deficit budget.
A balanced budget occurs when revenues are equal to or greater than total expenses. A surplus budget is when income or revenue exceeds expenditures, and a deficit budget occurs when expenses exceed revenue.
What is the primary goal of an investment: to generate income or to consume the good?
False
True or false: An investment always involves the outlay of some resource today with the hopes of a greater payoff in the future.
True
Is appreciation in the context of investment about a decrease in the value of an asset over time: true or false?
False
True or false: Investments can only refer to bonds and stocks, excluding other forms of generating future income.
False
Is speculation the same as investing: true or false?
False
Test your knowledge of personal finance with this quiz on budgeting and money management. Learn about different types of budgets, such as balanced, surplus, and deficit budgets, and explore strategies for effective financial management.
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