U)S. government bonds have no default risk because
A)they are issued in strictly limited quantities.
B)the federal government can increase taxes or print money to pay its obligations.
C)they are backed with gold reserves.
D)they can be exchanged for silver at any time.

Question

Quizplus · Accepted Answer

U.S. government bonds have no default risk because the federal government can increase taxes or print money to pay its obligations. This means that the government has the ability to make payments on its bonds even if there is not enough money in the budget. Additionally, the size and stability of the U.S. economy make it unlikely that the government would default on its debt. The other choices are incorrect as they do not accurately explain why U.S. government bonds have no default risk.

U)S. Government Bonds Have No Default Risk Because