Briefly describe the key economic features of the European Union.
What will be an ideal response?
POSSIBLE RESPONSE: The European Union (EU) began as the European Economic Community, a customs union among six countries. It now consists of twenty-eight countries that cooperate and coordinate across many areas of economic, social, environmental, and security policy. The EU's key economic features include a customs union, a single market for goods, services and the factors of production, and a common currency, used by most of the EU member countries. A customs union is a type of free trade agreement (FTA) which involves the removal of tariff barriers between members, together with the acceptance of a common external tariff against non-members. The EU single market is a broader agreement that promotes the free movement of goods, services, capital, and people. The euro is the common currency that is used by nineteen EU member countries. The European Central Bank (ECB) manages the euro and is responsible for the formulation and implementation of monetary policy for these nineteen countries.
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The benefits of economic growth are ________, while the costs of economic growth are ________.
A. increased output per person; less future consumption B. increased output per person; too small for concern C. more current consumption; less future consumption D. increased output per person; the consumption sacrificed in exchange for capital formation
Total profit is maximized
a. where the difference between total revenue and total cost is greatest. b. at that output level where marginal revenue equals average cost. c. where total revenue is at a maximum. d. at the point where all variable costs are covered.
Which of the following will decrease the money supply?
A) an increase in the discount rate (relative to the federal funds rate) B) an increase in the required reserve ratio C) an open market purchase by the Fed D) a and b E) a, b, and c
In a recession, demand for cars falls, and the demand curve in the market for cars
A. shifts to the right. B. shifts to the left. C. remains unchanged. D. slows down.