Which bond type contrasts with revenue bonds by being backed by the full faith and credit of the government?

General obligation bonds are distinct from revenue bonds as they are supported by the full faith and credit of the issuing government entity, which can include the ability to levy taxes to repay bondholders. This backing provides a high level of security for investors, as it signifies a commitment from the government to meet its debt obligations.

In contrast, revenue bonds are repaid from specific revenue sources generated by the projects they fund, such as tolls or fees from a service. This means that if the revenue does not meet expectations, the bondholders do not have recourse to the government’s general funds. Therefore, general obligation bonds represent a more secure investment compared to revenue bonds, making them an essential financing tool for governments when capitalizing on projects without relying solely on future revenues from those projects.