Advocates of "fixed policy rules" believe
A. That fine-tuning can improve macro outcomes.
B. That the economy is better off using discretionary policy.
C. In constant increases in the money supply and balanced federal budgets.
D. That politicians can best determine when to stimulate and restrain the economy.
Answer: C
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"Compensating wage differentials" arise because:
a. workers possess different skills. b. workers prefer the characteristics of some to those of others. c. firms pay higher wages for workers with higher marginal productivities. d. firms discriminate in hiring.
A deficit in a country's current account balance occurs whenever
A. money outflows from the country exceed its money inflows. B. money inflows into a country exceed its money outflows. C. its currency falls in value relative to other currencies. D. the country is alone in maintaining a strict gold standard.