Question : 21) Which of the following statements MOST accurate? A) The countries : 1303721

 

21) Which of the following statements is MOST accurate?

A) The countries of southern Europe are better endowed with capital and skilled labor than the countries of northern Europe.

B) The countries of northern Europe are better endowed with capital and skilled labor than the countries of southern Europe.

C) EU products that make intensive use of high-skill labor are most likely to come from Portugal.

D) EU products that make intensive use of low-skill labor are most likely to come from Great Britain.

E) The countries of eastern Europe are better endowed with capital and skilled labor than the countries of western Europe.

 

 

22) A recent study by Andrew Rose of the University of California showed that, on average, two countries that are members of the same currency union

A) trade three times as much with each other as countries that do not share a currency.

B) trade twenty times as much with each other as countries that do not share a currency.

C) trade ten times as much with each other as countries that do not share a currency.

D) trade six times as much with each other as countries that do not share a currency.

E) trade twice as much with each other as countries that do not share a currency.

 

 

23) Fiscal federalism in the EU refers to

A) one nation’s control of the monetary policy of all the other nations.

B) freedom of member countries to leave the EU at any time.

C) the transfer of economic resources from members with healthy economies to those suffering economic setbacks.

D) one nation’s freedom to abandon the Euro and use its own currency.

E) the transfer of economic resources between members with healthy economies.

 

 

24) Shortly after their admission into the EMU, Ireland and the Netherlands

A) both seceded from the EMU.

B) were expelled due to high levels of debt.

C) breached the inflation convergence criterion that had qualified them for admission to the EMU in the first place.

D) achieved inflation rates of zero percent.

E) abandoned the Euro as their national currency.

 

25) Which of the following best defines an optimum currency area?

A) a group of nations sharing the same currency

B) a group of regions in close proximity to each other.

C) a group of regions who operate under similar economic policies.

D) a group of regions with economies closely linked by factor mobility and by trade in goods and services

E) a group of nations that engage in free trade with each other

 

 

26) Which of the following statements is MOST accurate?

A) A rise in the size and frequency of country-specific disturbances to the joining country’s product markets raises the critical level of economic integration at which the exchange rate area is joined.

B) A rise in the size and frequency of country-specific disturbances to the joining country’s product markets lowers the critical level of economic integration at which the exchange rate area is joined.

C) A decline in the size and frequency of country-specific disturbances to the joining country’s product markets raises the critical level of economic integration at which the exchange rate area is joined.

D) A rise in the size and frequency of country-specific disturbances to the joining country’s product markets has no effect on the critical level of economic integration at which the exchange rate area is joined.

E) A decline in the size and frequency of country-specific disturbances to the joining country’s product markets does not affect the level of economic integration at which the exchange rate area is joined.

 

 

27) Which of the following statements is MOST accurate?

A) A low degree of economic integration between a country and the fixed exchange rate area that it joins reduces the resulting economic stability loss due to output market disturbances.

B) A high degree of economic integration between a country and the fixed exchange rate area that it joins reduces the resulting economic stability loss due to output market disturbances.

C) A high degree of economic integration between a country and the fixed exchange rate area that it joins increases the resulting economic stability loss due to output market disturbances.

D) A complete lack of economic integration between a country and the fixed exchange rate area that it joins reduces the resulting economic stability loss due to output market disturbances.

E) A low degree of economic integration between a country and the fixed exchange rate area that it joins increases the resulting economic stability loss due to output market disturbances.

 

28) The theory of optimum currency areas predicts that

A) floating exchange rates are most appropriate for areas closely integrated through international trade and factor movements.

B) fixed exchange rates are most appropriate for areas that are loosely integrated through international trade and factor movements.

C) fixed exchange rates are most appropriate for areas closely integrated through international trade and factor movements.

D) floating exchange rates are most appropriate for all countries in Europe.

E) fixed exchange rates are most appropriate for all countries in Europe.

 

 

29) Why does the GG schedule have a positive slope?

A) The monetary efficiency gain a country gets by joining a fixed exchange rate area falls as its economic integration with the area increases.

B) The monetary efficiency gain a country gets by joining a fixed exchange rate area rises as its economic integration with the area decreases.

C) The monetary efficiency gain a country gets by joining a fixed exchange rate area rises as its economic integration with the area increases.

D) The monetary efficiency gain a country gets by joining a floating exchange rate area rises as its economic integration with the area increases.

E) The monetary efficiency gain a country gets by joining a fixed exchange rate area is constant after their integration into the area.

 

 

30) Why does the LL schedule have a negative slope?

A) The economic stability loss from pegging to the area’s currencies rises as the degree of economic interdependence rises.

B) The economic stability loss from pegging to the area’s currencies falls as the degree of economic interdependence rises.

C) The economic stability loss from pegging to the area’s currencies falls as the degree of economic interdependence falls.

D) The economic stability loss from pegging to the area’s currencies rises as the degree of economic activity increases.

E) The economic stability loss from pegging to the area’s currencies is constant, even as the degree of economic activity increases.