Under a fixed-rate unified currency regime, each country belonging to the system
a. may pursue an independent monetary policy.
b. gives up its monetary policy independence to one central bank with the power to expand and contract the money supply.
c. is committed to conducting highly expansionary monetary policy in order to maintain the convertibility of its currency.
d. must fix its domestic interest rates in order to maintain the convertibility of its currency.
B
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
The difficulty of ascertaining the right second-best trade policy to follow
A) reinforces support for the third-best policy approach. B) reinforces support for increasing research capabilities of government agencies. C) reinforces support for abandoning trade policy as an option. D) reinforces support for free-trade options. E) reinforced support for the domestic market failure argument.
The monetary policies carried out by the Fed
a. must be ratified by Congress. b. must be consistent with fiscal policies passed by Congress. c. are sometimes inconsistent with fiscal policy. d. must be approved by the president.
Contractionary fiscal policy would be most effective in decreasing inflation when
A. the marginal propensity to consume is low. B. investment spending is insensitive to interest rates. C. the economy has a high marginal tax rate. D. investment spending is sensitive to interest rates.