Does Europe constitute an optimal common currency area? Why?
What will be an ideal response?
There is less agreement on the question. This is because neither of the two Mundell conditions appears to be satisfied. European countries have experienced very different shocks in the past. Workers move much less within European countries than they do within the United States. Because of language and cultural differences among European countries, mobility between countries is even lower.
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Milton Friedman called the response of lower interest rates resulting from an increase in the money supply the ________ effect
A) liquidity B) price level C) expected-inflation D) income
A recession is often considered to be:
A. an economic downturn that persists for more than two consecutive quarters of the year. B. any period of more than six months in which unemployment is rising. C. any period when the unemployment rate exceeds 6 percent. D. an economic downturn that persists for more than four consecutive quarters of the year.
Distinguish macroeconomics and microeconomics.
What will be an ideal response?
A purely competitive firm is in short-run equilibrium and its MC exceeds its ATC. It can be concluded that:
A. this is an increasing-cost industry. B. the firm is realizing a loss. C. the firm is realizing an economic profit. D. firms will leave the industry in the long run.