Question

1.

Most evidence suggests that greater U.S. trade with other nations has benefited all U.S. workers, but has benefited skilled U.S. workers relatively more by boosting their wages to a larger extent than those of unskilled workers.

True/False

2.

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.

True/False

3.

If deviations from real interest parity increase over time, then this is evidence of greater integration of international goods and financial markets.

True/False

4.

A set of nations that opt to utilize a common currency is called a free-currency area.

True/False

5.

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.

True/False

Answer 1

1) "True"

Globalization or trade with other countries has benefited the skilled workers more than unskilled workers in the US.

2) "True"

As the price of the product increases the firms look to hire more labor because of the marginal product of labor increases. The higher the price the more labor the firms will employ.

3) "False"

The greater the deviation the more it shows disintegration form the world market. If the markets are well integrated then the interest parity will occur in a very short time and there will not be any deviation.

4) "False"

They are called optimum currency area.

5) "True"

Sterilization means floating bonds of the exact value of the foreign currency which has entered the market. It is to absorb the excess liquidity brought in by the foreign currency in the market.