Each Year the Federal Government Spends More Money Than It

question 15

Multiple Choice

Each year the federal government spends more money than it takes in from revenue, as it has since the late 1990s.The difference is added to the _________________, or the total amount of money owed by the U.S.government, which sat at $20 trillion in late 2017.

• A) national debt
• B) national deficit
• C) federal notes receivable
• D) federal debt ceiling

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Definitions:

Reinvestment Rate

The percentage rate at which future cash flows from an investment are assumed to be reinvested, affecting the calculation of metrics like Net Present Value (NPV).

NPV

Net Present Value; a calculation used to determine the current value of a series of future cash flows by discounting them at a specific rate.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of potential investments by calculating the rate of return that makes the net present value of all cash flows equal to zero.

WACC

In calculating a firm’s capital costs, the Weighted Average Cost of Capital method considers the proportionate weights of different capital categories.