Why might a group of countries wish to have a common currency? Explain four reasons
What will be an ideal response?
First, a single currency eliminates the need to convert each other's money and thereby reduces transaction costs. Second, a single currency eliminates price fluctuations caused by changes in the exchange rate. The elimination of misleading price signals that result from exchange rate fluctuations is also a potential gain in efficiency. Third, the elimination of exchange rates through the adoption of a single currency can help increase political trust between countries seeking to increase their integration. Fourth, in some developing countries the adoption of a common currency may give their exchange rate system greater credibility.
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The level of an economic activity should be increased to the point where the ____ is zero
a. marginal cost b. average cost c. net marginal cost d. net marginal benefit e. none of the above
After a loan is made, the:
a. M2 money supply rises until the loan is repaid. b. M2 money supply rises until the loan is spent. c. M2 money supply rises until the loan is cleared. d. M2 money supply does not change until the loan is spent. e. M2 money supply does not change until the loan is cleared.
The domestic demand and supply for sugar are Qd = 700 ? 2P and QSD = 100 + 4P. The foreign supply is QSF = 150 + 3P. What is the domestic market price of sugar?
A. 110 B. 100 C. 150 D. 90
Which of the following is NOT true of an oligopoly?
A) They advertise their product. B) The firms recognize their interdependence. C) A few firm account for a large portion of the total output. D) Firms are price takers.