For the gold standard to achieve its maximum functioning efficiency, central banks should theoretically play the "rules of the game." What are these rules?
(a) Central bank policy should tie the flow of their gold reserves to their current accounts.
(b) Central banks should "lean against the wind" and follow policies that offset gold movements.
(c) Central banks should raise interest rates as gold flows in and lower them as gold flows out.
(d) Central banks should sell securities as gold flows in and buy them as gold flows out.
(a)
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Net public debt is
A) the excess of annual tax revenues over annual government spending. B) the sum owed by the public to keep the Social Security system afloat. C) the portion of government debt held by private individuals and firms. D) the excess of annual government spending over annual tax revenues.
The overwhelming unpopularity of inflation among citizens is largely a result of the fact that
A) inflation raises the real cost of such basic necessities as food, housing, and clothing. B) inflation reduces the value of real wealth. C) no one knows what causes it. D) no one (or almost no one) gains from inflation. E) people who gain from inflation often erroneously conclude that they are losing as a result of it.