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1. To meet the costs of short-and long term crisis situations.
2. To finance large scale projects that could not be paid for out of current income.
3. Deficit financing.
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Why does the US need to borrow money?
The government borrows money just like any other person would borrow money, they might need it for projects, maybe for bail outs or anything they are doing , go to http://bussinessmouse.googlepages.com
Causes of external debt?
Debt is often a nasty four letter word for the people that are facing it. The causes of external debt can include war, rebuilding efforts, and any other reason that a country would need to borrow money from another country.
Increase in real GDP are often interpreted as increase in welfare. what are some problems with this interpretation?
Increase in Real GDP is often interpreted as increase in welfare because Increase in Real GDP causes an increase in average interest rate in an economy by which Government expenditures (Government purchases and transfer payments) increases. Problem with this interpretation is that the Real GDP increases due to increase in price level or money market by which real money supply decreases and money supply demanded exceeds real money supply. That means that people start demanding more money in order to full fill their requirements.
How do falling interest rates and falling prices influence total demand in the economy?
When interest rates fall, money costs less to borrow. If prices fall, goods are easier to purchase. If consumer confidence is good, people and businesses may be tempted to borrow to buy goods at low prices. Low prices and low interest rates are often the result of poor consumer confidence as business need to lower prices to stimulate demand.
Although industrialists usually spoke out in favor of laissez-faire capitalism which kind of government intervention in the economy did they often favor?
Laissez-Faire, they truly supported it, because who wants the government to take your money? creation of tariff walls
How does the government often pay for the its deficits?
Money saved from past surplus
When cities in texas borrow money to finance government operations they often do so by.?
When cities in Texas borrow money, they often do so by imposing revenue bonds. Revenue bonds are a type of municipal bond.
Why do you borrow money?
There could be thousands of reasons people borrow money. To buy a car, a home, to take a vacation, there are too many reasons why people borrow money to list here. Hopefully you got the jest of this answer. There a numerous reasons for the borrowing of money but common ones are; home loans, purchasing of cars, insurance, purchssing of business companies etc. People borrow money in generall because they either cant afford something or they have no money in cash, so they borrow from the bank, the disadvantage however is that you have to pay it back, and what people don't realise is that the bank adds interest to the overall payment if you pay it over a period of time which is not in the month requested by the bank.
How does the government most often pay for it's deficits?
by decreasing spendings
Why does the US need to borrow money?
The government borrows money just like any other person would borrow money, they might need it for projects, maybe for bail outs or anything they are doing , go to http://bussinessmouse.googlepages.com
When the government has to borrow to service its old debt is called?
It's often called refinancing. Not a good way to keep a good credit record.
What will the bank do to meet a deficiency of excess reserves?
If banks have reserve deficiency they can: 1. Borrow money from another bank or financial institution usually short term. 2. Sell securities, often government securities 3. Borrow money from the FED. 4. Decrease the amount of loans they have, usually not renew short term loans that expire. They are usually against doing number 3 and 4. Mostly likely to do 1 I believe.
What does sponging mean?
Sponging could mean to wipe clean with a sponge or wet cloth, or to borrow money off someone (often several times).
What are municipal bonds often called?
State, county, and local governments also borrow money by selling municipal bonds (frequently referred to as "munis").
Why does a company choose to call callable bonds?
Often because interest rates have gone down, and they can issue new bonds or borrow money cheaper than the interest rate that is on the bonds. The other likely situation is that they made enough money that they have the cash to pay off the bonds and don't need to borrow it any more.
How does the government raise money if they don't have enough money to pay for the programs allowed?
It depends on the level of government and the country you're dealing with. Most governments are primarily supported by taxes, so they may increase one or more tax rates in order to take in more money. The most common way of raising money to cover unexpected expenses, though, is issuing bonds--basically, the government asks for a loan from the people and offers to pay interest on the money it borrows. Individuals can choose to invest in these bonds (loan money to the government) and will later get their money back with interest. EDIT: The U.S. Government often borrows from other countries in order to pay for various things. ANOTHER EDIT: The US Government does not often borrow from other countries' governments. Individuals in other countries can buy US Savings Bonds just as US citizens can. In particular, a significant number of Chinese investors have bought large amounts of US bonds, so in that sense the US Government has borrowed from those individuals, but not from the Chinese government.
What is a loan to the government called?
That's a difficult question to answer; governments do borrow money, and that is called a loan. But governments can also essentially "borrow" money in many other ways; by increasing the money supply, by selling bonds, through regulation, market manipulation, tariffs, etc. These manipulations are so subtle and complex that only advanced economists can truly understand them, and they too are often wrong. That's why the unemployment rate is currently so high; the economists/banks/brokers got it wrong.It was called "War Bonds" Submitted by Oscar LIm racsomil@hotmail.com
