SlideShare a Scribd company logo
In this final Written Assignment, you are asked to consider several aspects of international
government finance. When governments spend more than they collect in taxes, they can borrow
money to cover the shortfall. First, what makes almost all government politicians everywhere in
the world continue to spend more than is collected in taxes? Then, briefly explain why a
government would continue to borrow if it knew it could never pay back all of the loans,
including interest. And finally, borrowing requires people to loan the money to the government
(by buying government bonds). So why would international bond buyers be willing to purchase
government bonds from Greece, Spain, Portugal, and Italy when there appears to be some risk
that those governments will not be able to pay back those loans?
In this final Written Assignment, you are asked to consider several aspects of international
government finance. When governments spend more than they collect in taxes, they can borrow
money to cover the shortfall. First, what makes almost all government politicians everywhere in
the world continue to spend more than is collected in taxes? Then, briefly explain why a
government would continue to borrow if it knew it could never pay back all of the loans,
including interest. And finally, borrowing requires people to loan the money to the government
(by buying government bonds). So why would international bond buyers be willing to purchase
government bonds from Greece, Spain, Portugal, and Italy when there appears to be some risk
that those governments will not be able to pay back those loans?
Solution
The government spending is much more than the taxes that it collects due to the responsibility of
the government to meet the needs of Defence, social security and health programs. The
government also needs to spend on infrastructure and education of the economy and mere tax
collection is not sufficient to meet these needs.
Government borrows so that it can meet its expenditures without increasing the taxes in the
economy. There may be different reasons for the government borrowing. The tax revenues may
be less than what was predicted. There may be unexpected recession and hence higher
expenditure on unemployment. The government may be required to invest in public sector
Investments. All these expenditures which the government cannot avoid and hence the only way
out is to borrow money.
Investors may borrow money from Greece, Spain, Portugal and Italy in spite of the risk of
default due to the high yields offered by these countries. Due to the high risk involved the
investors get a high returns which attracts them towards such Investments.

More Related Content

Similar to In this final Written Assignment, you are asked to consider severa.pdf

Haider Ellalee & Walid Y Alali; GDP Growth and the US Debt Sustainability
Haider Ellalee & Walid Y Alali; GDP Growth and the US Debt SustainabilityHaider Ellalee & Walid Y Alali; GDP Growth and the US Debt Sustainability
Haider Ellalee & Walid Y Alali; GDP Growth and the US Debt Sustainability
Oxford Institute for Economic Studies
 
208 gwes unit5c
208 gwes unit5c208 gwes unit5c
208 gwes unit5c
ASM's IBMR- Chinchwad
 
8.1 notes
8.1 notes8.1 notes
8.1 notes
beremga
 
A civil defense of municipal bond investing by f. kneeland
A civil defense of municipal bond investing by f. kneelandA civil defense of municipal bond investing by f. kneeland
A civil defense of municipal bond investing by f. kneeland
Pim Piepers
 
A civil defense of municipal bond investing by F. Kneeland
A civil defense of municipal bond investing by F. KneelandA civil defense of municipal bond investing by F. Kneeland
A civil defense of municipal bond investing by F. Kneeland
Pim Piepers
 
Affect of us & european downturn on indian stock market
Affect of us & european downturn on indian stock marketAffect of us & european downturn on indian stock market
Affect of us & european downturn on indian stock market
nathanurag18
 
国家债务的基本常识.docx
国家债务的基本常识.docx国家债务的基本常识.docx
国家债务的基本常识.docx
SiewXiangWong
 

Similar to In this final Written Assignment, you are asked to consider severa.pdf (7)

Haider Ellalee & Walid Y Alali; GDP Growth and the US Debt Sustainability
Haider Ellalee & Walid Y Alali; GDP Growth and the US Debt SustainabilityHaider Ellalee & Walid Y Alali; GDP Growth and the US Debt Sustainability
Haider Ellalee & Walid Y Alali; GDP Growth and the US Debt Sustainability
 
208 gwes unit5c
208 gwes unit5c208 gwes unit5c
208 gwes unit5c
 
8.1 notes
8.1 notes8.1 notes
8.1 notes
 
A civil defense of municipal bond investing by f. kneeland
A civil defense of municipal bond investing by f. kneelandA civil defense of municipal bond investing by f. kneeland
A civil defense of municipal bond investing by f. kneeland
 
A civil defense of municipal bond investing by F. Kneeland
A civil defense of municipal bond investing by F. KneelandA civil defense of municipal bond investing by F. Kneeland
A civil defense of municipal bond investing by F. Kneeland
 
Affect of us & european downturn on indian stock market
Affect of us & european downturn on indian stock marketAffect of us & european downturn on indian stock market
Affect of us & european downturn on indian stock market
 
国家债务的基本常识.docx
国家债务的基本常识.docx国家债务的基本常识.docx
国家债务的基本常识.docx
 

More from thangarajarivukadal

Which of the following is not a high-speed Internet assess service.pdf
Which of the following is not a high-speed Internet assess service.pdfWhich of the following is not a high-speed Internet assess service.pdf
Which of the following is not a high-speed Internet assess service.pdf
thangarajarivukadal
 
Write a program to implement below operations with both singly and d.pdf
Write a program to implement below operations with both singly and d.pdfWrite a program to implement below operations with both singly and d.pdf
Write a program to implement below operations with both singly and d.pdf
thangarajarivukadal
 
Which of the following describes silver A material that has a low r.pdf
Which of the following describes silver  A material that has a low r.pdfWhich of the following describes silver  A material that has a low r.pdf
Which of the following describes silver A material that has a low r.pdf
thangarajarivukadal
 
why dont most other types of bacteria produce ulcers ( like helico.pdf
why dont most other types of bacteria produce ulcers ( like helico.pdfwhy dont most other types of bacteria produce ulcers ( like helico.pdf
why dont most other types of bacteria produce ulcers ( like helico.pdf
thangarajarivukadal
 
You will construct a manual for your company that defines the Risk M.pdf
You will construct a manual for your company that defines the Risk M.pdfYou will construct a manual for your company that defines the Risk M.pdf
You will construct a manual for your company that defines the Risk M.pdf
thangarajarivukadal
 
Which of the following statements about DNA and RNA are true, and wh.pdf
Which of the following statements about DNA and RNA are true, and wh.pdfWhich of the following statements about DNA and RNA are true, and wh.pdf
Which of the following statements about DNA and RNA are true, and wh.pdf
thangarajarivukadal
 
You observe a cell switch from performing cellular respiration to per.pdf
You observe a cell switch from performing cellular respiration to per.pdfYou observe a cell switch from performing cellular respiration to per.pdf
You observe a cell switch from performing cellular respiration to per.pdf
thangarajarivukadal
 
You are speaking to a group of high school students in a technology .pdf
You are speaking to a group of high school students in a technology .pdfYou are speaking to a group of high school students in a technology .pdf
You are speaking to a group of high school students in a technology .pdf
thangarajarivukadal
 
Who might use financial statements List at least 3 examples of like.pdf
Who might use financial statements List at least 3 examples of like.pdfWho might use financial statements List at least 3 examples of like.pdf
Who might use financial statements List at least 3 examples of like.pdf
thangarajarivukadal
 
What could be the rational for IRC exempting income from bonds issue.pdf
What could be the rational for IRC exempting income from bonds issue.pdfWhat could be the rational for IRC exempting income from bonds issue.pdf
What could be the rational for IRC exempting income from bonds issue.pdf
thangarajarivukadal
 
Tropical forests are extremely important ecosystems on the planet. Ho.pdf
Tropical forests are extremely important ecosystems on the planet. Ho.pdfTropical forests are extremely important ecosystems on the planet. Ho.pdf
Tropical forests are extremely important ecosystems on the planet. Ho.pdf
thangarajarivukadal
 
We learn of the the black dwarf, the final stage in a death of a low.pdf
We learn of the the black dwarf, the final stage in a death of a low.pdfWe learn of the the black dwarf, the final stage in a death of a low.pdf
We learn of the the black dwarf, the final stage in a death of a low.pdf
thangarajarivukadal
 
What are the main responsibilities of the Network Layer What are th.pdf
What are the main responsibilities of the Network Layer What are th.pdfWhat are the main responsibilities of the Network Layer What are th.pdf
What are the main responsibilities of the Network Layer What are th.pdf
thangarajarivukadal
 
These organs in spiders produce with In this kind of circulato.pdf
These organs in spiders produce with  In this kind of circulato.pdfThese organs in spiders produce with  In this kind of circulato.pdf
These organs in spiders produce with In this kind of circulato.pdf
thangarajarivukadal
 
Ensign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdf
Ensign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdfEnsign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdf
Ensign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdf
thangarajarivukadal
 
Oxidation and reduction states are relatively easy to determine for m.pdf
Oxidation and reduction states are relatively easy to determine for m.pdfOxidation and reduction states are relatively easy to determine for m.pdf
Oxidation and reduction states are relatively easy to determine for m.pdf
thangarajarivukadal
 
Question 9 (1 point) What is data visualization O Making a mental no.pdf
Question 9 (1 point) What is data visualization O Making a mental no.pdfQuestion 9 (1 point) What is data visualization O Making a mental no.pdf
Question 9 (1 point) What is data visualization O Making a mental no.pdf
thangarajarivukadal
 
Q i.Why is it, in general the fracture toughness of ductile material.pdf
Q i.Why is it, in general the fracture toughness of ductile material.pdfQ i.Why is it, in general the fracture toughness of ductile material.pdf
Q i.Why is it, in general the fracture toughness of ductile material.pdf
thangarajarivukadal
 
Problem 1. Think about an individual that you are investigating from .pdf
Problem 1. Think about an individual that you are investigating from .pdfProblem 1. Think about an individual that you are investigating from .pdf
Problem 1. Think about an individual that you are investigating from .pdf
thangarajarivukadal
 
Junior collects baseball cards. He owns one Felix Hernandez card tha.pdf
Junior collects baseball cards. He owns one Felix Hernandez card tha.pdfJunior collects baseball cards. He owns one Felix Hernandez card tha.pdf
Junior collects baseball cards. He owns one Felix Hernandez card tha.pdf
thangarajarivukadal
 

More from thangarajarivukadal (20)

Which of the following is not a high-speed Internet assess service.pdf
Which of the following is not a high-speed Internet assess service.pdfWhich of the following is not a high-speed Internet assess service.pdf
Which of the following is not a high-speed Internet assess service.pdf
 
Write a program to implement below operations with both singly and d.pdf
Write a program to implement below operations with both singly and d.pdfWrite a program to implement below operations with both singly and d.pdf
Write a program to implement below operations with both singly and d.pdf
 
Which of the following describes silver A material that has a low r.pdf
Which of the following describes silver  A material that has a low r.pdfWhich of the following describes silver  A material that has a low r.pdf
Which of the following describes silver A material that has a low r.pdf
 
why dont most other types of bacteria produce ulcers ( like helico.pdf
why dont most other types of bacteria produce ulcers ( like helico.pdfwhy dont most other types of bacteria produce ulcers ( like helico.pdf
why dont most other types of bacteria produce ulcers ( like helico.pdf
 
You will construct a manual for your company that defines the Risk M.pdf
You will construct a manual for your company that defines the Risk M.pdfYou will construct a manual for your company that defines the Risk M.pdf
You will construct a manual for your company that defines the Risk M.pdf
 
Which of the following statements about DNA and RNA are true, and wh.pdf
Which of the following statements about DNA and RNA are true, and wh.pdfWhich of the following statements about DNA and RNA are true, and wh.pdf
Which of the following statements about DNA and RNA are true, and wh.pdf
 
You observe a cell switch from performing cellular respiration to per.pdf
You observe a cell switch from performing cellular respiration to per.pdfYou observe a cell switch from performing cellular respiration to per.pdf
You observe a cell switch from performing cellular respiration to per.pdf
 
You are speaking to a group of high school students in a technology .pdf
You are speaking to a group of high school students in a technology .pdfYou are speaking to a group of high school students in a technology .pdf
You are speaking to a group of high school students in a technology .pdf
 
Who might use financial statements List at least 3 examples of like.pdf
Who might use financial statements List at least 3 examples of like.pdfWho might use financial statements List at least 3 examples of like.pdf
Who might use financial statements List at least 3 examples of like.pdf
 
What could be the rational for IRC exempting income from bonds issue.pdf
What could be the rational for IRC exempting income from bonds issue.pdfWhat could be the rational for IRC exempting income from bonds issue.pdf
What could be the rational for IRC exempting income from bonds issue.pdf
 
Tropical forests are extremely important ecosystems on the planet. Ho.pdf
Tropical forests are extremely important ecosystems on the planet. Ho.pdfTropical forests are extremely important ecosystems on the planet. Ho.pdf
Tropical forests are extremely important ecosystems on the planet. Ho.pdf
 
We learn of the the black dwarf, the final stage in a death of a low.pdf
We learn of the the black dwarf, the final stage in a death of a low.pdfWe learn of the the black dwarf, the final stage in a death of a low.pdf
We learn of the the black dwarf, the final stage in a death of a low.pdf
 
What are the main responsibilities of the Network Layer What are th.pdf
What are the main responsibilities of the Network Layer What are th.pdfWhat are the main responsibilities of the Network Layer What are th.pdf
What are the main responsibilities of the Network Layer What are th.pdf
 
These organs in spiders produce with In this kind of circulato.pdf
These organs in spiders produce with  In this kind of circulato.pdfThese organs in spiders produce with  In this kind of circulato.pdf
These organs in spiders produce with In this kind of circulato.pdf
 
Ensign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdf
Ensign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdfEnsign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdf
Ensign Danielle Anderson returned from a Qualified Hazardous Duty Ar.pdf
 
Oxidation and reduction states are relatively easy to determine for m.pdf
Oxidation and reduction states are relatively easy to determine for m.pdfOxidation and reduction states are relatively easy to determine for m.pdf
Oxidation and reduction states are relatively easy to determine for m.pdf
 
Question 9 (1 point) What is data visualization O Making a mental no.pdf
Question 9 (1 point) What is data visualization O Making a mental no.pdfQuestion 9 (1 point) What is data visualization O Making a mental no.pdf
Question 9 (1 point) What is data visualization O Making a mental no.pdf
 
Q i.Why is it, in general the fracture toughness of ductile material.pdf
Q i.Why is it, in general the fracture toughness of ductile material.pdfQ i.Why is it, in general the fracture toughness of ductile material.pdf
Q i.Why is it, in general the fracture toughness of ductile material.pdf
 
Problem 1. Think about an individual that you are investigating from .pdf
Problem 1. Think about an individual that you are investigating from .pdfProblem 1. Think about an individual that you are investigating from .pdf
Problem 1. Think about an individual that you are investigating from .pdf
 
Junior collects baseball cards. He owns one Felix Hernandez card tha.pdf
Junior collects baseball cards. He owns one Felix Hernandez card tha.pdfJunior collects baseball cards. He owns one Felix Hernandez card tha.pdf
Junior collects baseball cards. He owns one Felix Hernandez card tha.pdf
 

Recently uploaded

Smart-Money for SMC traders good time and ICT
Smart-Money for SMC traders good time and ICTSmart-Money for SMC traders good time and ICT
Smart-Money for SMC traders good time and ICT
simonomuemu
 
CACJapan - GROUP Presentation 1- Wk 4.pdf
CACJapan - GROUP Presentation 1- Wk 4.pdfCACJapan - GROUP Presentation 1- Wk 4.pdf
CACJapan - GROUP Presentation 1- Wk 4.pdf
camakaiclarkmusic
 
How to Add Chatter in the odoo 17 ERP Module
How to Add Chatter in the odoo 17 ERP ModuleHow to Add Chatter in the odoo 17 ERP Module
How to Add Chatter in the odoo 17 ERP Module
Celine George
 
Your Skill Boost Masterclass: Strategies for Effective Upskilling
Your Skill Boost Masterclass: Strategies for Effective UpskillingYour Skill Boost Masterclass: Strategies for Effective Upskilling
Your Skill Boost Masterclass: Strategies for Effective Upskilling
Excellence Foundation for South Sudan
 
MARY JANE WILSON, A “BOA MÃE” .
MARY JANE WILSON, A “BOA MÃE”           .MARY JANE WILSON, A “BOA MÃE”           .
MARY JANE WILSON, A “BOA MÃE” .
Colégio Santa Teresinha
 
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Dr. Vinod Kumar Kanvaria
 
Main Java[All of the Base Concepts}.docx
Main Java[All of the Base Concepts}.docxMain Java[All of the Base Concepts}.docx
Main Java[All of the Base Concepts}.docx
adhitya5119
 
How to Manage Your Lost Opportunities in Odoo 17 CRM
How to Manage Your Lost Opportunities in Odoo 17 CRMHow to Manage Your Lost Opportunities in Odoo 17 CRM
How to Manage Your Lost Opportunities in Odoo 17 CRM
Celine George
 
DRUGS AND ITS classification slide share
DRUGS AND ITS classification slide shareDRUGS AND ITS classification slide share
DRUGS AND ITS classification slide share
taiba qazi
 
PCOS corelations and management through Ayurveda.
PCOS corelations and management through Ayurveda.PCOS corelations and management through Ayurveda.
PCOS corelations and management through Ayurveda.
Dr. Shivangi Singh Parihar
 
writing about opinions about Australia the movie
writing about opinions about Australia the moviewriting about opinions about Australia the movie
writing about opinions about Australia the movie
Nicholas Montgomery
 
Assessment and Planning in Educational technology.pptx
Assessment and Planning in Educational technology.pptxAssessment and Planning in Educational technology.pptx
Assessment and Planning in Educational technology.pptx
Kavitha Krishnan
 
বাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdf
বাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdfবাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdf
বাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdf
eBook.com.bd (প্রয়োজনীয় বাংলা বই)
 
Azure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHatAzure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHat
Scholarhat
 
A Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in EducationA Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in Education
Peter Windle
 
Life upper-Intermediate B2 Workbook for student
Life upper-Intermediate B2 Workbook for studentLife upper-Intermediate B2 Workbook for student
Life upper-Intermediate B2 Workbook for student
NgcHiNguyn25
 
The basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptxThe basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptx
heathfieldcps1
 
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
Executive Directors Chat  Leveraging AI for Diversity, Equity, and InclusionExecutive Directors Chat  Leveraging AI for Diversity, Equity, and Inclusion
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
TechSoup
 
Film vocab for eal 3 students: Australia the movie
Film vocab for eal 3 students: Australia the movieFilm vocab for eal 3 students: Australia the movie
Film vocab for eal 3 students: Australia the movie
Nicholas Montgomery
 
Digital Artefact 1 - Tiny Home Environmental Design
Digital Artefact 1 - Tiny Home Environmental DesignDigital Artefact 1 - Tiny Home Environmental Design
Digital Artefact 1 - Tiny Home Environmental Design
amberjdewit93
 

Recently uploaded (20)

Smart-Money for SMC traders good time and ICT
Smart-Money for SMC traders good time and ICTSmart-Money for SMC traders good time and ICT
Smart-Money for SMC traders good time and ICT
 
CACJapan - GROUP Presentation 1- Wk 4.pdf
CACJapan - GROUP Presentation 1- Wk 4.pdfCACJapan - GROUP Presentation 1- Wk 4.pdf
CACJapan - GROUP Presentation 1- Wk 4.pdf
 
How to Add Chatter in the odoo 17 ERP Module
How to Add Chatter in the odoo 17 ERP ModuleHow to Add Chatter in the odoo 17 ERP Module
How to Add Chatter in the odoo 17 ERP Module
 
Your Skill Boost Masterclass: Strategies for Effective Upskilling
Your Skill Boost Masterclass: Strategies for Effective UpskillingYour Skill Boost Masterclass: Strategies for Effective Upskilling
Your Skill Boost Masterclass: Strategies for Effective Upskilling
 
MARY JANE WILSON, A “BOA MÃE” .
MARY JANE WILSON, A “BOA MÃE”           .MARY JANE WILSON, A “BOA MÃE”           .
MARY JANE WILSON, A “BOA MÃE” .
 
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
 
Main Java[All of the Base Concepts}.docx
Main Java[All of the Base Concepts}.docxMain Java[All of the Base Concepts}.docx
Main Java[All of the Base Concepts}.docx
 
How to Manage Your Lost Opportunities in Odoo 17 CRM
How to Manage Your Lost Opportunities in Odoo 17 CRMHow to Manage Your Lost Opportunities in Odoo 17 CRM
How to Manage Your Lost Opportunities in Odoo 17 CRM
 
DRUGS AND ITS classification slide share
DRUGS AND ITS classification slide shareDRUGS AND ITS classification slide share
DRUGS AND ITS classification slide share
 
PCOS corelations and management through Ayurveda.
PCOS corelations and management through Ayurveda.PCOS corelations and management through Ayurveda.
PCOS corelations and management through Ayurveda.
 
writing about opinions about Australia the movie
writing about opinions about Australia the moviewriting about opinions about Australia the movie
writing about opinions about Australia the movie
 
Assessment and Planning in Educational technology.pptx
Assessment and Planning in Educational technology.pptxAssessment and Planning in Educational technology.pptx
Assessment and Planning in Educational technology.pptx
 
বাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdf
বাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdfবাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdf
বাংলাদেশ অর্থনৈতিক সমীক্ষা (Economic Review) ২০২৪ UJS App.pdf
 
Azure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHatAzure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHat
 
A Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in EducationA Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in Education
 
Life upper-Intermediate B2 Workbook for student
Life upper-Intermediate B2 Workbook for studentLife upper-Intermediate B2 Workbook for student
Life upper-Intermediate B2 Workbook for student
 
The basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptxThe basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptx
 
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
Executive Directors Chat  Leveraging AI for Diversity, Equity, and InclusionExecutive Directors Chat  Leveraging AI for Diversity, Equity, and Inclusion
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
 
Film vocab for eal 3 students: Australia the movie
Film vocab for eal 3 students: Australia the movieFilm vocab for eal 3 students: Australia the movie
Film vocab for eal 3 students: Australia the movie
 
Digital Artefact 1 - Tiny Home Environmental Design
Digital Artefact 1 - Tiny Home Environmental DesignDigital Artefact 1 - Tiny Home Environmental Design
Digital Artefact 1 - Tiny Home Environmental Design
 

In this final Written Assignment, you are asked to consider severa.pdf

  • 1. In this final Written Assignment, you are asked to consider several aspects of international government finance. When governments spend more than they collect in taxes, they can borrow money to cover the shortfall. First, what makes almost all government politicians everywhere in the world continue to spend more than is collected in taxes? Then, briefly explain why a government would continue to borrow if it knew it could never pay back all of the loans, including interest. And finally, borrowing requires people to loan the money to the government (by buying government bonds). So why would international bond buyers be willing to purchase government bonds from Greece, Spain, Portugal, and Italy when there appears to be some risk that those governments will not be able to pay back those loans? In this final Written Assignment, you are asked to consider several aspects of international government finance. When governments spend more than they collect in taxes, they can borrow money to cover the shortfall. First, what makes almost all government politicians everywhere in the world continue to spend more than is collected in taxes? Then, briefly explain why a government would continue to borrow if it knew it could never pay back all of the loans, including interest. And finally, borrowing requires people to loan the money to the government (by buying government bonds). So why would international bond buyers be willing to purchase government bonds from Greece, Spain, Portugal, and Italy when there appears to be some risk that those governments will not be able to pay back those loans? Solution The government spending is much more than the taxes that it collects due to the responsibility of the government to meet the needs of Defence, social security and health programs. The government also needs to spend on infrastructure and education of the economy and mere tax collection is not sufficient to meet these needs. Government borrows so that it can meet its expenditures without increasing the taxes in the economy. There may be different reasons for the government borrowing. The tax revenues may be less than what was predicted. There may be unexpected recession and hence higher expenditure on unemployment. The government may be required to invest in public sector Investments. All these expenditures which the government cannot avoid and hence the only way out is to borrow money. Investors may borrow money from Greece, Spain, Portugal and Italy in spite of the risk of default due to the high yields offered by these countries. Due to the high risk involved the investors get a high returns which attracts them towards such Investments.