Description
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? They are to be three to four (3-4) page papers. The purpose is to be concise and precise. PLEASE DO NOT USE METAPHORS. For example, do NOT say things like “Walmart kills small businesses.” (Walmart did not pick up a knife and stab the other business.) I am looking for your thought processes and reasoning, not necessarily a particular conclusion. In essence I want to see if you are engaging in the economic way of thinking.
