Accounting and Finance: Everything you need to Know

Q1 

The Federal Reserve and the Department of Treasury work together during recessions to stabilize the economy and restore it to its previous level of operations. Essentially, the role of the Treasury is to manage the US government’s expenditure and revenues, revenue collection, as well as assessing the country’s economic state and offering advice that is useful in economic policy formulation (Kidwell, 2017) . The Fed, on the other hand, is concerned primarily with financial systems health and often uses monetary and fiscal policies to regulate them. During recessions, the US Treasury works with the Fed to increase the flow of money in the economy through the purchase of government bonds and bills (Kidwell, 2017) . Secondly, the Treasury participates in the formulation process of economic policies that aim at reducing the effects of the recession (Kidwell, 2017) . Thirdly, the Treasury issues tax rebates and avails cash to consumers in order to increase their spending and spur commercial activity. 

Q2 

It is perfectly ethical to accept donations from a lobbying group. However, of importance would be to evaluate the interests of the lobby group to determine whether they align with my agenda once I am voted into Congress (Schultz, 2002) . If they align, then I would not only accept the donation, but I would also support the legislation in question (Preston et al, 1998) . If the groups` interests do not align with my own, I would reject the contribution because accepting the contribution may be misconstrued for an endorsement of the groups agenda. I would also ensure that all ethical requirements are satisfied, including full disclosure of the contributors of the campaign (Preston et al, 1998) . 

Q3 

It would be unethical to support a spending bill solely for the sake of securing financial support for the next campaign from a group that is concerned of its own interests (Preston et al, 1998) . A spending bill may have a significant impact on the US economy and therefore should be handled delicately (Preston et al, 1998) . I would evaluate the bill to determine whether I should support it or not. Secondly, I would seek to understand the reason behind the lobbying group’s interest in passing of the bill (Schultz, 2002) . If this bill should be supported due to the favorable effect to the economy, I would support it, but would only accept a financial contribution from the lobby group if its interests were aligned to mine (Preston et al, 1998) . 

Q4 

The price levels are likely to increase. The increase in the supply of the money increases the purchasing power of the citizens thereby increasing their tendency to spend (Croushore, 2007) . The increased consumption will drive demand. The demand of goods and services will, therefore, increases thereby leading to an increase in prices. In the case of financial instruments, prices are expected to increase as well, as interest rates drop. 

Q5 

This is a case in which my partner is using the business name to extort a potential client, and to manipulate them into agreeing to pay more than is necessary in order to obtain the loan (Gomez, 2015). In that case, the partner is taking advantage of the client’s desperation and state of urgency. I would advice my partner to offer better terms to the client so that the supposed $1,000 processing fee is removed and the interest rate is increased instead. This measure is likely to lessen the burden of the client, thereby putting them in a better position to pay back within the agreed period (Gomez, 2015). This measure is also likely to allow the business to retain the client. 

References

Croushore, D. D. (2007).  Money and banking: A policy-oriented approach . Boston, MA: Houghton Mifflin Co. Bottom of FormTop of FormTop of Form 

Gomez, G. J. (2015).  Private money lending: Learn how to consistently generate a passive income stream: a safer road to a sound financial life and a peaceful retirement . Bottom of Form 

Kidwell, D. S. (2017).  Financial institutions, markets, and money . Hoboken, NJ: John Wiley & Sons, Inc. Top of Form 

Preston, N., Sampford, C. J. G., & Bois, C.-A. (1998).  Ethics and political practice: Perspectives on legislative ethics . Bottom of FormBottom of FormTop of Form 

Schultz, D. A. (2002).  Money, politics, and campaign finance reform law in the states . Durham, NC: Carolina Academic Press.