An optimum currency area is a geographic region
A. with inflation near zero.
B. that allows exchange rates to float.
C. for which the benefits of having a common currency exceed the costs.
D. that has fixed exchange rates.
Answer: C
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If the marginal propensity to consume (MPC) is 0.75 and government purchases increase by $200 billion, then
A) equilibrium real Gross Domestic Product (GDP) will increase by $50 billion. B) the effect on equilibrium real Gross Domestic Product (GDP) cannot be determined from the given information. C) equilibrium real Gross Domestic Product (GDP) will increase by $800 billion. D) equilibrium real Gross Domestic Product (GDP) will increase by $200 billion.
Amanda, age 6, opens a lemonade stand. She makes all the lemonade from a mix she found in her parents' pantry. Her stand is an old box she found in the garage. The pitcher and paper cups were taken from the kitchen. Which of the following is true?
a. The opportunity cost of the lemonade is zero. b. The only opportunity cost of the lemonade is Amanda's time. c. Amanda's explicit costs are zero. d. The implicit costs of Amanda's lemonade are zero. e. Whatever revenue Amanda gets will be pure economic profit.
The value of a price index in the base year will always be zero
a. True b. False Indicate whether the statement is true or false
Price floors set a legal minimum price on a product or commodity
a. True b. False Indicate whether the statement is true or false