Week 3: Week 3 - W3: Assignment 1 DiscussionAssignment 1: Financial ConceptsYour niece just started...

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Week 3: Week 3 - W3: Assignment 1 DiscussionAssignment 1: Financial ConceptsYour niece just started her college career with a major in economics. She is curious as to the interrelationship between the success of an economy and the financial markets, concepts, and financial institutions. Accordingly, she has developed a list of questions addressing these issues and has asked that you explain the ideas.1. What is a federal government budget deficit? What is the national debt? How does a budget deficit affect the economy?She is also curious about the time value of money concepts. Specifically, she has the following questions about these concepts:2. Why are consumers considered to be risk averse? What methods could used to deal with risk?3. It has been said that a dollar received today is worth more than a dollar received tomorrow. What does this mean and what is the significance to the economy?4.What is the difference between the present value of a future sum of money and the future value of a present sum of money? What is the significance of these concepts to economics?5. If you deposited $1,000 in an account paying 6% interest compounded annually, how long would it take to double?Deliverables:Submit an 8-page paper in Microsoft Word format, by Wednesday, December 19, 2012, addressing the above-noted items.Please cite your sources in a APA format.
	
Document Preview: Week 3: Week 3 - W3: Assignment 1 DiscussionAssignment 1: Financial ConceptsYour niece just started her college career with a major in economics. She is curious as to the interrelationship between the success of an economy and the financial markets, concepts, and financial institutions. Accordingly, she has developed a list of questions addressing these issues and has asked that you explain the ideas.1. What is a federal government budget deficit? What is the national debt? How does a budget deficit affect the economy?She is also curious about the time value of money concepts. Specifically, she has the following questions about these concepts:2. Why are consumers considered to be risk averse? What methods could used to deal with risk?3. It has been said that a dollar received today is worth more than a dollar received tomorrow. What does this mean and what is the significance to the economy?4.What is the difference between the present value of a future sum of money and the future value of a present sum of money? What is the significance of these concepts to economics?5. If you deposited $1,000 in an account paying 6% interest compounded annually, how long would it take to double?Deliverables:Submit an 8-page paper in Microsoft Word format, by Wednesday, December 19, 2012, addressing the above-noted items.Please cite your sources in a APA format.

Robert · Accepted Answer

FEDERAL GOVERNMENT BUDGET DEFICIT 
The federal government budget deficit was an important political issue for presidential elections 
held in 2012. Currently debt of USA is approximately fifteen trillion dollars, and is expected to 
increase by around one or two trillion dollars per annum, if national tax revenues and spending 
remains at current level. In 2011, Standard and Poor's(the international rating agency) reduced 
the government of United States debt from its extreme rating to  AA+ rating from AAA, and 
various financial institutions, data institutes, technocrats, politicians as well as economic advisors 
have of more forward effects if the budget deficit follows in the future as well as national debt 
continues and grows. However, many of the technocrats and experts have also questioned that 
United States debt levels are not near the dangerous level, and the nation should accelerate 
spending in the short duration for avoiding any further recession period.   
Following are the two factors causing the Federal Government Budget Deficit: 
Spending of Government: Various expenses incurred from government treasury like the 
payments and perquisites to army soldiers as well as increasing the armed base, public school 
funding grant, building of roads and investment in infrastructure projects, seniors medications 
etc. 
Revenue of Government: It is the money earned by government. Basic revenue is from 
taxation, however, custom and excise duty, selling of resource rights and leases (such as oil 
drilling rights on government owned lands), and the selling of property of government.
National Debt. 
It is the addition of all previous annual federal deficits. Whereas the deficits are financed by 
borrowings of government, debt of nation is equal to all government outstanding debt. 
Government debt or national debt or public debt is the debt owed by a federal government. (In 
the United States and other states, "national debt" also refers to the debt of a state or provincial 
government, legislative or local government.) By contrast, the annual "national deficit" refers to 
the difference between national receipts and expenditure in a fiscal year.  
One basic method of financing government operations is national debt. , but it is not the only the 
sole method. A government also creates currency to monetize their debts,

Week 3: Week 3 - W3: Assignment 1 Discussion Assignment 1: Financial Concepts Your niece just started her college career with a major in economics. She is curious as to the interrelationship between...

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