Chapter 14, Problem 1DQ

Summary Introduction

To explain: The government groups which compete for funds in the U.S based capital market.

Introduction:

Capital Markets:

These are the type of financial markets in which buyers and sellers are involved in a trade of commercial securities like bonds, stocks, etc.

Answer to Problem 1DQ

In the U.S. based capital markets, the government groups which compete for funds are:

 1. The federal government

 2. The government agencies 

 3. The state and local governments

Explanation of Solution

In the capital market of the United States the government groups which compete for funds are as follows.

The federal government

In this form of government, power is divided amongst the federal and state government. The collection of funds is imperative for the fulfilment of various purposes, such as education, public welfare, construction of roads, bridges, and highways.

The government agency

It is a government organization that is established by either legislation or by executive powers. It is a permanent or quasi-permanent agency whose main obligation is to handle and perform the specific administrative functions. It requires financial capital to cater to the promotions of various health and education-related programs, construction of roads, dams, highways, and public utilities like water, electricity, etc.

The state and local governments

The state government is an administrative body that makes and executes various laws and duties for a particular state. The local government handles and measures the performances within a particular geographical area. They need a budget for the welfare of the public, roads and highways constructions, and other public utilities like water, electricity.

All of the above-mentioned government groups compete with one another and other corporations for a limited supply of financial capital.