Where the money goes · seed 1 · A4, ink-friendly. The answer key prints on its own page for grown-ups.

Reading what a budget really says

Civics & Economics · Government · ages 15-16
Name ______________________   Date ____________

  1. Why can an existing benefit entitlement be hard to cut quickly?

    • Reducing the entitlement may require changing its legal basis
    • Reducing the payment estimate changes the legal entitlement
    • Reducing an annual budget estimate suspends the entitlement for that year

  2. An invented 100-unit budget allocates 32 units to pensions, 24 to health, 20 to other services, 16 to defence and 8 to interest. Which three categories have the largest shares?

    • Pensions, defence and interest
    • Pensions, health and other services
    • Health, other services and debt interest

  3. Which statement distinguishes a deficit from debt?

    • Both measure all tax revenue collected during the same period
    • Debt is the year's excess spending; a deficit is outstanding borrowing
    • A deficit is excess spending over a period; debt is outstanding borrowing

  4. Which information is needed to assess a new programme's funding plan?

    • The programme's projected cost without a source of funds
    • Its projected cost and the resources proposed to cover it
    • The programme's proposed funding sources without an estimate of its cost

  5. A government's loans require interest payments. Why must its spending plan include them?

    • They are spending commitments that use budget resources
    • They repay the borrowed principal rather than paying borrowing costs
    • They add to revenue received by the government

  6. If fewer people qualify for a benefit under unchanged eligibility rules, total payments can fall without changing the law.

    Circle one:   True   False

  7. Two budgets each spend 100 units at the same prices. Budget A allocates 20 units to schools; Budget B allocates 25. Which gives schools the larger spending share?

    • Budget B, because 25 out of 100 exceeds 20 out of 100
    • Budget A, because 20 units is the smaller amount
    • Both budgets, because equal total spending gives equal school shares

  8. A balanced budget has no spare funds. A new programme costs 8 units and a tax cut loses 3 units of revenue. Other revenue is unchanged and no borrowing is allowed. What cuts elsewhere are needed?

    • 5 units of cuts elsewhere
    • 8 units of cuts elsewhere
    • 11 units of cuts elsewhere
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Answer key

For grown-ups. Fold this page away before handing over the rest.

Reading what a budget really says W1-mt_eMsYs94O9Z-s1

  1. Reducing the entitlement may require changing its legal basis · An entitlement established by law is a legal commitment.
  2. Pensions, health and other services · The largest amounts are 32, 24 and 20. Out of 100 units, these are also shares of 32%, 24% and 20%.
  3. A deficit is excess spending over a period; debt is outstanding borrowing · A deficit measures spending above revenue during a period. Debt measures borrowing still outstanding at a date.
  4. Its projected cost and the resources proposed to cover it · Compare the programme's cost with available resources and proposed funding changes.
  5. They are spending commitments that use budget resources · Required interest payments use budget resources.
  6. True · The same rules can produce lower total payments when fewer recipients qualify.
  7. Budget B, because 25 out of 100 exceeds 20 out of 100 · Schools receive 20% in A and 25% in B. Budget B allocates the larger share.
  8. 11 units of cuts elsewhere · Cuts must cover the 8-unit added cost and the 3-unit revenue loss: 8 + 3 = 11 units.
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