Question

why would a government issue revenue bonds (which generally are issued at a higher rate of interest than general obligation bonds) even though the government knows that if revenues from the project are not sufficient to cover principal and interest payments, the government will use resources from general government activities to fund the principal and interest payments? group of answer choices revenue bonds may not require approval of the voters. revenue bonds may not be considered in legal debt limitations. revenue bonds may permit the interest costs to be passed on to the users of the services financed. all of the above.

Answer 1

Governments may issue revenue bonds for their benefits including no need for voter approval, exclusion from legal debt limitations, and the ability to pass interest costs to service users, even at higher interest rates than general obligation bonds.

Step-by-step explanation:

A government may choose to issue revenue bonds despite the generally higher interest rates compared to general obligation bonds for several reasons:

• Revenue bonds may not require the approval of voters, which means that they can be issued faster and with potentially less political resistance.
• They may not be considered under legal debt limitations, which allows the government to raise capital without affecting its debt capacity.
• Revenue bonds allow the government to pass the interest costs on to the users of the services financed by the bonds, aligning the burden of the cost with the beneficiaries of the project.

Hence, the correct answer is that all of the reasons listed above contribute to why a government would issue revenue bonds even at higher interest rates.