Which of the following are accurate findings of recent studies about the effectiveness of intervention activities?
A. Smaller interventions are usually more successful than larger interventions.
B. Intervention is often effective for two weeks or less in reversing the direction of the trend of the exchange rate or reducing the speed of the trend.
C. The effectiveness of the intervention usually can be observed in the trend for months to come.
D. Interventions are usually more effective when exercised by an individual monetary authority rather than by the authorities of two or more countries intervening jointly.
Answer: B
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The lump sum principle suggests that the tax that reduces utility the least is
a. a tax on income b. a tax on a good with many substitutes c. an equal tax per-unit on all goods d. a tax on a good with only a few substitutes
One reason why purchasing power parity may not work perfectly is that some goods, because of their nature, are difficult to trade
a. True b. False
Refer to the accompanying figure. If the price of a latte increases from $2.00 to $2.50:
A. total expenditure would decrease. B. the change in total expenditure, if any, would depend on the supply curve. C. total expenditure would increase. D. total expenditure would stay the same.
Long-run competitive equilibrium requires:
A. average costs to be zero for all firms in the industry. B. accounting profits to be zero for all firms in the industry. C. economic profits to be zero for all firms in the industry. D. price to be zero for all firms in the industry.