Master the Government Essentials 2026 – Unlock Your Path to Acing the Test!

The key idea is how federal spending is set: discretionary spending is chosen each year through the appropriations process, while mandatory spending is required by law based on entitlement formulas. Discretionary funding is allocated annually by Congress through appropriations acts, so these amounts can be increased or decreased from year to year. Mandatory spending, on the other hand, flows automatically according to laws that determine who qualifies and how much benefits should be paid (examples include Social Security, Medicare, and Medicaid). Changes to mandatory programs require new or revised legislation to alter eligibility or benefit formulas.

So the correct statement reflects that discretionary spending is decided annually by Congress, and mandatory spending is required by law for entitlement programs.