Q and A: What will happen if the US defaults?

Q BY MICHAEL BIRD What was the deadline that passed at the end of September?

A At midnight on 30 September, the deadline to avoid a government shutdown passed, meaning that around 800,000 nonessential employees of the government were sent home.

Q What is the significance of events happening this week?

A Treasury secretary Jack Lew says the US will exhaust its extraordinary measures to avoid the debt limit on Thursday. The US would be left to make payments with $30bn (£18.76bn) cash in hand.

Q What would the effect on the bond market be?

A The market in US treasury bonds has a reputation for being safe, and extremely liquid, meaning it can be swiftly exchanged for cash. A brief default would only impact the treasury bills maturing during that period, but it is hard to say whether there would be any longer-term effect on the perception of US debt.

Q How can the issue be resolved if a political deal isn’t reached?

A The President could potentially use the 14th amendment of the constitution to ignore the debt ceiling, but Obama has rejected this option so far.