The theory of optimum currency areas predicts that
A) floating exchange rates are most appropriate for areas closely integrated through international trade and factor movements.
B) fixed exchange rates are most appropriate for areas that are loosely integrated through international trade and factor movements.
C) fixed exchange rates are most appropriate for areas closely integrated through international trade and factor movements.
D) floating exchange rates are most appropriate for all countries in Europe.
E) fixed exchange rates are most appropriate for all countries in Europe.
C
You might also like to view...
Use the idea of external costs to explain why some cities have laws against late-night rock concerts
What will be an ideal response?
The narrowest definition of money is called ________
a. "L" money b. M2 c. M1 d. time deposits
Table 9-1 Output Consumption Investment Net Exports 1,000 800 500 100 1,500 1,200 500 100 2,000 1,600 500 100 2,500 2,000 500 100 3,000 2,400 500 100 3,500 2,800 500 100 4,000 3,200 500 100 ? In Table 9-1, inventories will be increasing as long as output is above
A. 1,000 B. 1,500 C. 2,000 D. 3,000
Suppose you have just opened a store to sell espresso machines. Both you and a competing store buy this machine from a manufacturer for $130 each. Your competitor, who has a store of the same size as yours, is currently selling about 10 machines a month
at a price of $200 per machine. You expect to sell about 6 machines a month at a price of $220 per machine. If you lower your price, you expect to make a loss. Which of the following could explain why your competitor is able to profitably sell the machine at a lower price although the cost of purchasing the machine is the same for the both of you? A) The competing store probably has a greater number of employees. B) The competing store probably has a lower average variable cost of production. C) The competing store's goal is to maximize revenue and not profit. D) The competing store probably has a lower average cost because average fixed cost falls as output increases.