Question

1. At a given quantity of a product demanded, an increase in demand for the product results in a rise in marginal revenue and hence the marginal revenue product of labor and demand for labor.

Select one:

a. TRUE

b. FALSE

2. The "trilemma" concept refers to the fact that a nation may simultaneously select a combination of any two, but not all three, of the following:

Select one:

a. a managed, dirty float for the exchange rate; a non-independent monetary policy; closure of domestic markets to financial capital flows.

b. flexible bilateral and cross exchange rates; independent, discretionary foreign exchange market interventions; open, liberalized markets for cross-border trade of merchandise and services.

c. fixed bilateral and cross exchange rates; non-independent foreign exchange market interventions; closure of markets to cross-border trade of merchandise and services.

d. fixed exchange rates; an independent, discretionary monetary policy; open, liberalized markets for financial capital.

3. An example of a sterilized foreign exchange market intervention is a purchase of foreign exchange reserves that is exactly matched by an open market purchase.

Select one:

a. TRUE

b. FALSE

Answer 1