The U.S. federal government is unlikely to default on its bond payments because
A) if necessary, it can print the money needed to make payments on time.
B) its bond payments are insured.
C) the U.S. federal budget usually runs a surplus, providing ample funds for repaying debt.
D) of all of these.

Question

Quizplus · Accepted Answer

The U.S. federal government has the power to print its own currency, which means it is unlikely to default on its bond payments as it can always print more money if necessary. This does not mean there are no consequences to printing money, but defaulting on its debt is not one of them. The other options given (B and C) are not accurate: the bond payments are not insured, and the federal budget has not run a surplus in many years.

The US Federal Government Is Unlikely to Default on Its Bond