The rules for joining the Eurozone specified monetary economic conditions that the potential entrants had to achieve for admission. The convergence criteria of the ECB were:
A) moderate inflation, low unemployment, and adequate foreign currency reserves.
B) no national debt and no current account deficits within the past five years.
C) inflation rates roughly matching the lowest in the Eurozone, stable exchange rate peg for two years, and equivalent long-term interest rates.
D) a stable political situation, high GDP growth rate, and moderate unemployment
Ans: C) inflation rates roughly matching the lowest in the Eurozone, stable exchange rate peg for two years, and equivalent long-term interest rates.
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The identity stating that the total amount spent on final output equals the amount received for final output is known as the
A) equation of exchange. B) circular flow identity. C) identity equation. D) fundamental law of economics.
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
The vertical distance between the average variable cost and average total cost curves
A. decreases as quantity increases. B. is everywhere equal to total fixed costs. C. increases at a decreasing rate. D. is everywhere equal to marginal cost.
The main reason that the Fed now requires banks to hold a certain fraction of their deposits in reserves is
A. because banks would otherwise attempt to keep all of their deposits on reserve. B. to ensure the safety of the deposits. C. because this allows the Fed to manipulate the money supply. D. historical continuity.