Choose one of the following topics to discuss below.
Choose one question and give me a paragraph answer.
A：Why do private (companies and corporations) and public institutions (cities, states and governments) use debt to raise capital for their operations? Why are tax revenues not enough to for the public sector? Why are revenues not enough for the private sector? Do you think there is an advantage to use debt for both private and public entities?
B：If the US government does not vote to increase the debt ceiling the Federal Reserve can overstep and create entities that will buy Treasuries from the government and give the government cash. The Federal Reserve is essentially printing money to give the Federal government through printing money and buying Treasuries, eventually the money has to be repaid to the shell entities and the Federal reserve though. Reflect on the problems/benefits you think this will have for our economy.
I do not need reference. You just write down your thinking
Answer preview
Both private and public institutions involve spending money in the present by investing in a long-term project that will raise income in the future. For instance, a company can invest in a big, costly machine or build a new plant that will last for years but yield a lot of profit in the future. Private and public institutions raise such funds through different ways like early-stage investors, reinvesting profits, selling stock, or borrowing from banks or bonds. However, many firms who want to invest in big projects mostly get their finances through debts. When a firm has a better still of earning profit and a significant earning record of revenue, it can pay its debts, and so it becomes easy to borrow money. Firms borrow money through either banks or bonds.
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