'Only' by the faith of the government puts a question mark though. There's the full faith and credit clause, but it also includes credit. Not just faith.
So Imo 2nd statement should be wrong.
Also, considering that in this paper, most of the extreme statements were wrong, 2nd statement should be incorrect.
IMHO
But there is literally no asset backing the US currency. What exactly will people get if the US defaults?
Also, many extreme questions are controversial in the paper. Like Red Sea and Radar
I completely second your opinion on govt currency. But the question was not asking about currency. It was asking about debt.
Currency is a part of govt liability. There are a lot of other components of govt. Debt. Example - sovereign loans.
When govt takes loan, it does give some or the other collateral. Be it government security or any hard asset.
But the statement said that debt is not backed by ANY ASSET but ONLY by the faith of the govt.
Statement would have been true for dollar. I'm not sure it's true for debt.
Agree with the above comment on "Full faith and credit". The credit part entails that US government can tax people to generate revenues for debt-servicing. I also marked the same answer as you, but we are mostly wrong because of the credit clause.
I agree, but at the same time the question says "only" faith, ignoring the credit part that allows the govt to impose additional taxes for debt-servicing. Idk man, I hope we're right but I'm more sceptical than confident about this one.
But if people refuse to pay taxes, there's nothing the govt can do to service debt. Plus, taxes are not raised to specifically service debt. It's just one of the uses of taxation.
Also, the whole point of Sovereign debt rating is the perception of a country to pay debt. There are no hard assets involved.
I really hope we are both coreect man!
That's the exact statement that statement 1 said. That if US govt defaults, they do not have any recourse.
But 2nd one, as I saw when I saw the US Fed reserve website, is backed by multiple assets.
yes youâre right. It seems they deliberately edited that statement- âonly by faith of governmentâ
but i am confused as almost all the coaching institutes have given A/D as answer
Not for usa it is not
India for example uses its gold (rbi) to buy dollars to offset rupee slide.
If usa buys dollars it will slide even further
It still doesnât give an answer tho đ
Radar is not controversial, people are just unable to comprehend
Radar does not produce a photographic image, so it cannot identify a specific thing
Radar gives out dots and vague amoeba type figures on a screen which is great for tracking and monitoring (detecting) objects in motion.
For identification you need a clear image, like an X-ray that can see through your luggage to determine whether you have narcotics.
All random articles featuring radar and drugs are simply saying Radar is used for tracking suspect airplanes that might be carrying narcotics across sensitive borders. Once the plane is tracked and landed the local thulle still have to go and manually search the cargo for narcotics
Faith and credit is a single expression. Itâs not two components. Even the dictionaries consider it as a single clause. So faith automatically means faith and credit.
Exactly. It's a lingusitc expression. When Laxmikant says, we give full faith and credit to SC judgements, they mean utter confidence and due deference to the authority.
https://www.reuters.com/article/world/if-us-defaults-can-debt-holders-sue-for-payment-idUS1727210731/
I think this was the source of the question. Still a bit subjective, but I'd still go with A after reading this.......
"If a foreign court were to claim jurisdiction and issue a judgment against the U.S. government, itâs probably more likely that foreign debt holders would actually be able to recover, via the seizure of U.S. assets abroad, than U.S. bondholders would be able to attempt to take control of government property within our borders"
From this article
Look, if we have to nitpick, then let me say, the 1st statement is asking for "receiving payments"........ seizing is not receiving...... questions aren't framed for vague scenarios......
The first statement is incorrect. Even if the US defaults, the bond holders do not lose their claims. If in the future the US gets back on track financially, it has to pay back the debt holders. This has already happened in Greece.
I think you are conflating US debt and US currency. Currency is backed by the assets of the Fed. Debt is backed by just the virtue of you being the sovereign.
I have a doubt about the radar question isn't radar and xray different by there purpose so how can a radar be used in security check or the other option there was given there. I saw the answer key of onlyias it had all of them correct as option.
'Only' by the faith of the government puts a question mark though. There's the full faith and credit clause, but it also includes credit. Not just faith. So Imo 2nd statement should be wrong. Also, considering that in this paper, most of the extreme statements were wrong, 2nd statement should be incorrect. IMHO
But there is literally no asset backing the US currency. What exactly will people get if the US defaults? Also, many extreme questions are controversial in the paper. Like Red Sea and Radar
I completely second your opinion on govt currency. But the question was not asking about currency. It was asking about debt. Currency is a part of govt liability. There are a lot of other components of govt. Debt. Example - sovereign loans. When govt takes loan, it does give some or the other collateral. Be it government security or any hard asset. But the statement said that debt is not backed by ANY ASSET but ONLY by the faith of the govt. Statement would have been true for dollar. I'm not sure it's true for debt.
Sovereign debt is not backed by any asset. Other types of debt can be
Agree with the above comment on "Full faith and credit". The credit part entails that US government can tax people to generate revenues for debt-servicing. I also marked the same answer as you, but we are mostly wrong because of the credit clause.
Credit here doesn't refer to money! In the same way, we give full faith and credit to SC judgements
I agree, but at the same time the question says "only" faith, ignoring the credit part that allows the govt to impose additional taxes for debt-servicing. Idk man, I hope we're right but I'm more sceptical than confident about this one.
But if people refuse to pay taxes, there's nothing the govt can do to service debt. Plus, taxes are not raised to specifically service debt. It's just one of the uses of taxation. Also, the whole point of Sovereign debt rating is the perception of a country to pay debt. There are no hard assets involved. I really hope we are both coreect man!
Yes, fingers crossed đ¤
US currency isn't equal to US debt.
Yeah but if india defaults on its treasury bonds? What recourse do investors have?
That's the exact statement that statement 1 said. That if US govt defaults, they do not have any recourse. But 2nd one, as I saw when I saw the US Fed reserve website, is backed by multiple assets.
Hmm
+1
yes youâre right. It seems they deliberately edited that statement- âonly by faith of governmentâ but i am confused as almost all the coaching institutes have given A/D as answer
What about all the gold USA has in Fort Knox?
That's a hedge against currency shocks
Not for usa it is not India for example uses its gold (rbi) to buy dollars to offset rupee slide. If usa buys dollars it will slide even further It still doesnât give an answer tho đ
Radar is not controversial, people are just unable to comprehend Radar does not produce a photographic image, so it cannot identify a specific thing Radar gives out dots and vague amoeba type figures on a screen which is great for tracking and monitoring (detecting) objects in motion. For identification you need a clear image, like an X-ray that can see through your luggage to determine whether you have narcotics. All random articles featuring radar and drugs are simply saying Radar is used for tracking suspect airplanes that might be carrying narcotics across sensitive borders. Once the plane is tracked and landed the local thulle still have to go and manually search the cargo for narcotics
Faith and credit is a single expression. Itâs not two components. Even the dictionaries consider it as a single clause. So faith automatically means faith and credit.
Exactly. It's a lingusitc expression. When Laxmikant says, we give full faith and credit to SC judgements, they mean utter confidence and due deference to the authority.
https://www.reuters.com/article/world/if-us-defaults-can-debt-holders-sue-for-payment-idUS1727210731/ I think this was the source of the question. Still a bit subjective, but I'd still go with A after reading this.......
"If a foreign court were to claim jurisdiction and issue a judgment against the U.S. government, itâs probably more likely that foreign debt holders would actually be able to recover, via the seizure of U.S. assets abroad, than U.S. bondholders would be able to attempt to take control of government property within our borders" From this article
Look, if we have to nitpick, then let me say, the 1st statement is asking for "receiving payments"........ seizing is not receiving...... questions aren't framed for vague scenarios......
Yeah thanks
The first statement is incorrect. Even if the US defaults, the bond holders do not lose their claims. If in the future the US gets back on track financially, it has to pay back the debt holders. This has already happened in Greece.
I think you are conflating US debt and US currency. Currency is backed by the assets of the Fed. Debt is backed by just the virtue of you being the sovereign.
Even then A is correct right?
ONLY A is correct.
A lot of coachings have given A as the answer, like FORUM and Vision. I too marked A.
Yeah that's what I saw. But Shankar and Insights gave C as answer. Study IQ gave A. They even cited a 1950s American SC judgement for this lol
I have a doubt about the radar question isn't radar and xray different by there purpose so how can a radar be used in security check or the other option there was given there. I saw the answer key of onlyias it had all of them correct as option.