Is the EU an optimum currency area? Why or why not?
What will be an ideal response?
Europe is not an optimum currency area. Labor mobility is highly limited. Economic and political conflicts within the euro zone have been persistent and they continue to result in questions regarding the ability of the euro zone to survive going forward.
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A production possibilities curve is negatively sloped because: a. the price of a good falls as you move down along the curve
b. resources are wasted as you move along the curve. c. it is not possible to adjust production decisions at all once an economy operates on the curve. d. once on the frontier, it is only possible to increase production of one good by reducing production of the other.
Which statement is false?
A. During the Great Depression millions of working-class and middle-class people demanded welfare payments. B. Until the 1930s the prevalent theory of poverty was that the poor were lazy. C. The heritage of slavery theory explains most poverty in this country. D. None of these statements are false.
If the price elasticity of demand for a good is 2, then a 10 percent decrease in the quantity demanded must be the result of
a. a 0.2 percent increase in the price. b. a 2.5 percent increase in the price. c. a 5 percent increase in the price. d. a 20 percent increase in the price.
Refer to Figure 6.1. Assume that L1 represents the budget line before a price change. The income effect is shown by the movement:
A. from bundle A to bundle C.
B. from bundle A to bundle B.
C. from bundle B to bundle C.
D. from bundle C to bundle B.