BTEC Business Personal Finance 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

Which of the following describes fixed expenses?

Costs that vary with consumption

Monthly costs that remain constant

Fixed expenses are defined as those monthly costs that remain constant over a specific period, irrespective of the levels of consumption or income fluctuations. This means that they do not change from month to month, making them predictable and easier to budget for. Examples of fixed expenses include rent or mortgage payments, insurance premiums, and subscription fees.

These expenses contrast with other types of costs, such as variable expenses, which fluctuate based on usage or consumption, and discretionary expenses, which may arise unexpectedly and are often non-essential. Understanding fixed expenses is crucial for effective personal financial management, as they impact one’s ability to create a stable budget and plan for savings or investments.

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Unexpected costs that arise occasionally

Expenses that increase with income

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