Assuming the Free Flow of Capital Across Borders, Which of the Following

question 39

Multiple Choice

Assuming the free flow of capital across borders, which of the following statements is most correct?

• A) A central bank can have both a fixed exchange rate and an independent inflation policy.
• B) A central bank cannot have both a fixed exchange rate and an independent inflation policy.
• C) The central banks of most industrialized countries focus on fixed exchange rates.
• D) While most central banks of industrialized countries favor fixing exchange rates, their primary concern is on domestic inflation.

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Definitions:

Average Fixed Cost

the total fixed costs divided by the number of units produced, illustrating how fixed costs dilute with increased production.

Average Variable Cost

The total variable costs of production divided by the number of units produced, representing the variable cost per unit.

Marginal Revenue

The additional income generated from the sale of one more unit of a product or service.

Total Product

The overall quantity of goods or services produced by a firm within a specific period.