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Federal debt analysis, renting versus owning, and capital budgets

1. Is it possible for the federal debt to increase in a year when the federal government has a surplus? How?
2. Are monopolies illegal, or does the government sometimes aid in establishment of a monopoly?
3. How large is total federal, state, and local government spending compared to the U.S. GDP?
4. What are the major sources of financing for the federal government, state governments, the health sector, and the not-for-profit sector?
5. Do capital budgets have an impact on operating budgets? Explain your answer thoroughly.
6. Summarize the advantages and disadvantages of leasing. Provide an example in your response.
7. What are the limitations of the internal rate of return method and the problems with the payback method?
8. What are some reasons that capital asset acquisition decisions receive particular attention?

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1. Is it possible for the federal debt to increase in a year when the federal government has a surplus? How?
Yes, because the federal government is required to handle money by spending what it takes in. However, trust funds, accounts that serve as holding accounts in trust for some types of funding are allowed to accumulate money. Social Security and Medicare are the best known of these trust funds. They can continue to accumulate money, creating a surplus in the budget, even as the government spends and creates debt through borrowing.

2. Are monopolies illegal, or does the government sometimes aid in establishment of a monopoly?
Yes, monopolies are illegal if they work to block access into the industry by other companies. However, there are legal monopolies, created because the owners have the rights to or own a resource or patent. In these cases, the patent or resource is bound by ownership and the company can service or create a product based on such ownership. The government and laws (Called Antitrust Laws) prohibit monopolies from existing where they restrain trade. However, a company or person does not have to give away a resource or patented process to create trade or equalize the market.

Electric and natural gas, phone services, utilities are granted the right to provide service in specific areas, creating a monopoly, but they are regulated by the government and pricing is set within the government commission that ...

Solution Summary

The expert examines renting versus owning and capital budgets. A federal debt analysis is determined.

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