An advantage of a flexible exchange rate system relative to a fixed system is that in a flexible rate system
a. currency speculation will be reduced.
b. balance of payments surpluses and deficits can be dealt with using fiscal policy, not monetary policy.
c. inflation will be minimized by the "discipline of the balance of payments."
d. the price of imported goods will be kept relatively low.
e. none of the above.
E
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Under the rational expectations hypothesis, if wages adjust rapidly to new information about intended policy actions, the only time that changes in government policies have real effects is when
A) the changes are unanticipated. B) the changes involve monetary policy. C) the changes involve fiscal policy. D) the changes affect aggregate demand.
When the United States imposes a tariff on a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus
A) increase; smaller than; increase B) decrease; larger than; decrease C) decrease; larger than; increase D) decrease; equal to; increase