The greater the degree of economic integration between markets in the home country and the base country:
A) the greater the volume of transactions and the greater the benefit to the home country of fixed exchange rates.
B) the smaller the volume of transactions and the lesser the benefit to the home country of fixed exchange rates.
C) the greater the volume of transactions and the greater the benefit to the home country of flexible exchange rates.
D) the less important the volume of transactions and the greater the importance of ethnic similarities.
Ans: A) the greater the volume of transactions and the greater the benefit to the home country of fixed exchange rates.
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Diminishing returns along a production function means that each additional hour of labor employed
A) produces a successively smaller additional amount of real GDP. B) produces a successively larger additional amount of real GDP. C) produces a constant additional amount of real GDP. D) does not produce any additional real GDP. E) forces the real wage rate to rise.
If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC, he will
A) order banks to reduce their reserves. B) order banks to raise their interest rates in an attempt to get them to loan out more of their reserves. C) conduct an open market purchase. D) conduct an open market sale.