Saleh 1

Fouad O. Saleh

English 1201-501

Professor Cassel

20 May 2019

Government Spending and Interest Rates

The reason why I chose my topic on government spending and its effect on interest rates

is that I saw a news clip on increasing government debt. I know from prior knowledge that the

government funds its spending by issuing interest rate bearing bonds. Since I am a finance and

accounting double major, I have a very fond interest in different investment opportunities and

how certain macroeconomic trends can affect potential returns. I need to know the information I

am asking about because it will help me gauge what a good investment would look like in

different stages of government spending.

I feel this topic is very important and prevalent because the United States debt is

continuously increasing. I also feel this topic will have lots of quality information to research and

write about. Moving on, before doing any research, I think this topic will help me further

understand information and certain concepts that apply to my areas of study. Additionally, I

think this topic will introduce me to various other questions that I would have otherwise not have

thought of. Moving forward, I believe this topic will help uncover certain mysteries and myths

surrounding the financial markets and how government actions can affect them. Further, I

believe this topic will have a great amount of quality information to research and write about and

will allow me to add excellent value to my research paper. Finally, before doing any research,

my prior knowledge on the topic reveals can show that I already understand the basics and
 Saleh 2

fundamentals on how the government fuels its debt i.e. borrowing. Moreover, I know that the

government debt level is increasing every day, second by second, and is not expected to stop

anytime soon.

I am hoping to learn all of the factors involved in the government deficit spending and

how it got to this point. Furthermore, I am hoping to learn how the federal reserve sets the

interest rates and if the government spending effects their decisions. Two good research

questions I have about my topic are as follows: Does the federal reserve set the rate on

government bonds or does the government itself set those rates? Finally, who determines the

governments budget for the fiscal year?