Question

Which of Mina's expenses should most likely be ranked as fixed expenses? Check all that apply.

1) groceries
2) house payment
3) discretionary spending
4) automobile insurance
5) electricity bill

ANSWER: 2,4

Answer 1

2)House Payment and 4)Automobile Insurance

Answer 2

The following expenses are considered fixed expenses:

• House payment
• Automobile insurance

Fixed expenses are defined in contrast to variable expenses. The first represent those costs in which the amount due remains the same every month/week/year during the time the contract lasts.

On the other hand, variable costs are defined as those which can change from one month to the next, or from one year to the next, depending on the use you make from the product or service they are linked to.