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The government pays interest rate because it wants to look good internationally, otherwise it wouldn't even pay the "low interest rates". Explain to me how in the world the governments use trees to make money and a machine and then they have to borrow money. They can make as much money as they want and they would go and borrow money. This procedure is just crazy since the government has monopoly on all trees in their states. There is something more sinister to this method. Another thing is that the government can lend money tons of money to other third world countries, but is in debt itself. The government always find millions to invest in wars, but is in debt.
Wiki User
∙ 15y ago
The government can borrow at lower interest rates because they are considered to be a reliable borrower with the ability to repay debts. Investors perceive government bonds as low-risk investments, which drives demand and lowers interest rates. Additionally, central bank policies can influence interest rates, making it cheaper for the government to borrow.
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Does congress have the power to borrow money?
Yes, Congress has the power to borrow money on behalf of the United States government. This authority is outlined in the U.S. Constitution, which grants Congress the ability to borrow money to pay the debts and provide for the common defense and general welfare of the country.
How does the government fund a budget deficit?
The government can fund a budget deficit through borrowing money by issuing bonds, treasury bills, or other debt securities. It can also raise funds through increasing taxes or cutting spending in other areas to offset the deficit.
What are principal and interest on a loan?
The principal is the initial amount borrowed in a loan. Interest is the cost charged by the lender for borrowing that principal amount. The total repayment amount on a loan typically includes both the principal and the interest.
What is definition of lawful money?
Lawful money refers to currency that is considered legal tender by a government and can be used to settle debts, pay taxes, and purchase goods and services. This includes coins and banknotes issued by the government or central bank that are widely accepted in exchange for goods and services.
What is the money limit for the small claims procedure in England and Wales?
The money limit for small claims in England and Wales is £10,000 for claims made in England and Wales. This limit applies to the total amount being claimed, excluding interest and costs.
Is borrowed money taxable?
Money that is borrowed is not taxable. If you borrow it and don't pay it back, it can be classified as income and be subject to income tax. If you borrow money and are not being charged interest, the government will consider the cost of interest to be income that is taxed.
In order to distribute money does the government sell money to the banks?
No, the Government does not sell money to the banks. Instead they loan it to them at very low interest rates. The banks borrow money from the central bank a.k.a the government to use for their operations and repay the money along with the interest to them.
How does the Fed lower interest rates?
In reality, the Fed does not lower interest rates. It lowers the rate charged to banks to borrow money. This usually results in a lowering of commercial rates.
What do people pay to borrow money?
The loan is called the principal. People pay interest to borrow money, but payment is interest plus money toward the principal.
What is money a person pays to borrow money?
Interest.
Who decides how much money the government has to borrow?
Nobody decides how much money the government has to borrow. When the government wants to borrow money it has to issue or create debt with the US Treasury.
What are the advantages of a lower interest rate?
When you borrow money - either loan, overdraft, credit card etc..... - you will not be paying back as much interest. However, there is always a down side. You will not be getting as much interest on your savings. I say borrow a million, and blow the lot!!!!!
If I borrow money knowing it has interest - is it up to me to pay it and if I do not is that stealing?
If you borrow money on agreed terms, including the obligation to pay interest, then choose not to pay the interest, that would be stealing.
What kind of interest works against you if you borrow money?
compound interest
How does the Federal Government borrow money?
The federal government borrows money from issuing Treasury bonds. The bonds are bought by people, businesses and other government agencies. The bonds work by people lending money to the government who in turn pays back that money plus interest.
What is preferable a loan with lower interest present value or a loan with a lower periodic?
The lower interest rate is always preferred because interest is the amount you pay for borrowing money. In either case, you'll have to pay back the principle, so it amounts to a cost of money borrowed issue. By opting for a lower periodic payment, you are spending more to borrow the same money. Not the best option unless you are the lender.
Can states borrow money?
yes. states can borrow money from citizens through government bonds
