Higher costs result from a currency union when:
A) nations are economically dissimilar so that demand shocks affect each economy asymmetrically.
B) nations are economically similar so that demand shocks affect each economy symmetrically.
C) there is intense competition between the economies.
D) the currency is pegged to the U.S. dollar.
Ans: A) nations are economically dissimilar so that demand shocks affect each economy asymmetrically.
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If velocity remains constant, which of the following examples would cause inflation?
a. Money supply increases by 8 percent; real GDP increases by 6 percent. b. Money supply increases by 5 percent; real GDP increases by 5 percent. c. Money supply increases by 4 percent; real GDP increases by 7 percent. d. Money supply increases by 9 percent; real GDP increases by 10 percent.
U.S. exports are included in aggregate demand because the exports contribute to the total ______.
a. spending on goods and services by U.S. consumers b. U.S. demand for foreign goods and services c. U.S. sales of goods and services by foreign producers d. demand for U.S. goods and services
How is monopolistic competition similar to perfect competition?
a. Both have market power. b. Both have easy entry and exit. c. Both have few sellers. d. Both have differentiated products.
There are several types of barriers to entry that can create a monopoly. Which of the following barriers is the result of government action?
A) network externalities B) public franchise C) economies of scale D) control of a key resource