If a currency union lowers the cost of trade and therefore promotes increased trade, the Euro-optimists believe that:
A) a currency union at some point will no longer be necessary.
B) at some point the OCA criteria will be satisfied.
C) the benefits of having an independent monetary policy will outweigh the benefits from the currency union.
D) the currency union may never be beneficial to an individual nation, but it does reduce political tension in large regions.
Ans: B) at some point the OCA criteria will be satisfied.
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The balance of payments equals
A) the sum of the current account and the financial account. B) the current account minus net unilateral transfers. C) net investment income from abroad. D) the net increase in a country's official reserve assets.
Firms that exhibit price-taking behavior
A) wait for other firms to set price, take it as given, and charge a higher price. B) have outputs that are too small to influence market price and thus take it as given. C) take pricing behavior in their own hands. D) are independently capable of setting price.
All of the following affect the demand elasticity for labor EXCEPT
A) final product income elasticity. B) ease of substitution of labor for other inputs. C) final product price elasticity. D) labor costs as a portion of total cost.
The entry of new firms into an industry lowers the economic profit of the existing firms
a. True b. False Indicate whether the statement is true or false