Draw the graph of the GG and LL schedules and explain the logic behind the slopes of each of the schedules
What will be an ideal response?
The correct graph has "degree of economic integration between the joining country and the exchange rate area" on the x-axis, and "gains and losses for the joining country" on the y-axis. The GG curve has a positive slope since the monetary efficiency gain a country gets by joining a fixed exchange rate area rises as its economic integration with the area increases. The LL curve has a negative slope because the economic stability loss from pegging to the area's currencies falls as the degree of economic interdependence rises. The two curves cross at a point that determines the critical level of economic integration (1 between the fixed exchange rate area and the country considering joining. In other words, it is the minimum integration level at which the country will join. (See Figure 20-5 in the text.)
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If an economy's actual GDP exceeds its potential GDP, _____
a. wages and prices must fall b. self-correcting forces will shift the SRAS curve to the left c. self-correcting forces will shift the AD curve to the left d. inflation will occur when AD shifts to the left e. unemployment is likely to be unusually high
The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89 . In order to boost ticket revenues, an economist would advise:
a. decreasing the price of hockey match tickets because demand is elastic b. increasing the price of hockey match tickets because demand is elastic. c. not changing the price of hockey match tickets because demand is unit elastic. d. increasing the price of hockey match tickets because demand is inelastic.
Who operates and controls a corporation in its day-to-day activities?
A) the board of directors B) stockholders C) employees D) management
Suppose you bought a Volkswagen Beetle for 12,000 euros, and $1 would buy 0.90 euros. You would find the cost of the car in dollars and cents by
A. dividing 12,000 by 1.11. B. dividing 1.11 by 12,000. C. dividing 12,000 by 0.90. D. dividing 0.90 by 12,000.