Currently the NAFTA nations do not meet the conditions for an optimal currency area. What are the two main reasons why?
What will be an ideal response?
Historically Mexico's business cycle has not been correlated with the cycles in the United States and Canada; labor mobility is limited.
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The rate of interest that the Fed charges banks on loans is called the reserve rate
a. True b. False Indicate whether the statement is true or false
Total output in an economy increases when each person specializes because
a. there is less competition for the same resources. b. each person spends more time producing that product in which he or she has a comparative advantage. c. a wider variety of products will be produced within each country due to specialization. d. government necessarily plays a larger role in the economy due to specialization.
A key implication of the policy irrelevance proposition is that
A. only unanticipated policy actions can influence real Gross Domestic Product (GDP). B. only fully anticipated policy actions can influence real Gross Domestic Product (GDP). C. the rational expectations hypothesis is incorrect. D. none of these.
The presence of externalities favors ________ and the presence of other distortionary taxes favors ________.
A. nonneutral taxes; neutral taxes B. neutral taxes; nonneutral taxes C. nonneutral taxes; nonneutral taxes D. neutral taxes; neutral taxes