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GS Paper IUPSC Prelims 2024
Indian Economic Planning & Growth
Question No. 299Interactive Test Mode
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+2-0.66

Q299. Consider the following statements: Statement-I : If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be able to exercise their claims to receive payment. Statement-II : The USA Government debt is not backed by any hard assets, but only by the faith of the Government. Which one of the following is correct in respect of the above statements?

Consider the following statements: Statement-I : If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be able to exercise their claims to receive payment. Statement-II : The USA Government debt is not backed by any hard assets, but only by the faith of the Government. Which one of the following is correct in respect of the above statements?

Select the correct option below (or cross out options to eliminate)
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Official Answer Key & Detailed Solution

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Official UPSC Answer KeyUPSC Prelims 2024 • Indian Economy

Correct Answer: Option (D) — Statement-I is incorrect, but Statement-II is correct.

Concept & Option Breakdown

Standard Reference Verified
  • Statement-I is incorrect: Sovereign default or missed payments by the US Government would cause delays or restructuring, but it does not extinguish the legal claims of bondholders. Investors retain their contractual and legal claims and can seek judicial remedies through courts such as the US Court of Federal Claims.
  • Statement-II is correct: US Treasury debt is fiat-backed sovereign debt not collateralized by physical assets like gold or real property; it is backed by the 'full faith and credit' of the US Government and its sovereign power to levy taxes and issue currency.
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Question Specifications & Syllabus Mapping

Examination & YearUPSC Civil Services Preliminary Examination 2024 (Q299)
Paper & Marking SchemeGS Paper I • 2 Marks (-0.66 Negative for incorrect response)
Syllabus Subject & TopicIndian Economy → Indian Economic Planning & Growth
Official Answer KeyOption (D) — Statement-I is incorrect, but Statement-II is correct.

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Frequently Asked Questions — UPSC Prelims 2024 Q299

What is the official answer for UPSC Prelims 2024 GS Paper I Question 299 (Indian Economy)?

The official UPSC answer key for this 2024 Indian Economy (Indian Economic Planning & Growth) question is Option (D): "Statement-I is incorrect, but Statement-II is correct.". Correct attempts carry 2 Marks with -0.66 Negative penalty for wrong answers.

Which UPSC Prelims syllabus topic does this 2024 question belong to?

This question belongs to GS Paper I under the subject "Indian Economy" and micro-topic "Indian Economic Planning & Growth". You can explore all repeated questions from Indian Economic Planning & Growth in Acme AI's 3D Prelims PYQ Realm or practice 50 full-length and sectional tests in the APT Prelims Test Series.

How can I solve this Indian Economic Planning & Growth UPSC Prelims question using option elimination?

To solve Indian Economic Planning & Growth questions in UPSC Prelims, identify extreme modifiers, verify core NCERT conceptual definitions, and eliminate mutually contradictory statement pairs before locking your final option.

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