1. When the government uses tax revenue to pay off portions of the national debt, total purchasing power in the economy
a. increases
b. decreases
c. is not affected at any level
d. remains the same but changes individually
2. Monetizing the debt causes
a. the money supply to contract
b. the money supply to rise
c. tax revenues to contract
d. tax revenues to rise
3. The federal government's ability to repay the national debt is limited only by the
a. debt ceiling
b. incidence of taxes
c. total assets of the economy
d. political clout of the Fed's Board of Governors
4. Paying off the national debt would redistribute income from the
a. debt holders to the taxpayers
b. taxpayers to the major recipients of transfer payments
c. banks to the taxpayers
d. taxpayers to the debt holders
5. The rate at which two currencies are exchanged for each other is the
a. exchange rate
b. tariff rate
c. reserve rate
d. managed rate