Question 1

What event in 2009 ignited the euro crisis?

Accepted Answer

Greece elected a new government in 2009

Question 2

Which of the following statements is the MOST accurate?

Accepted Answer

A) Trade of EU countries with other EU countries has increased since the euro was introduced. 
B) Trade of EU countries with other EU countries has decreased since the euro was introduced. 
C) Trade of EU countries with other EU countries has increased in some years and decreased in other years since the euro was introduced. 
D) Trade of EU countries with other EU countries can no longer be measured since both trading parties have the same currency. 
E) Trade of EU countries with North American countries has decreased since the euro was introduced. 
A) Trade of EU countries with other EU countries has increased since the euro was introduced. 
B) Trade of EU countries with other EU countries has decreased since the euro was introduced. 
C) Trade of EU countries with other EU countries has increased in some years and decreased in other years since the euro was introduced. 
D) Trade of EU countries with other EU countries can no longer be measured since both trading parties have the same currency. 
E) Trade of EU countries with North American countries has decreased since the euro was introduced.

Question 3

Explain what the GG-LL model tells us about the benefits of extensive trade between EU member states and comment on the significance of similarity of economic structure in this framework.

Accepted Answer

The GG-LL model shows that extensive tra

Question 4

Using the GG-LL framework,analyze the effect of Libya subsidizing the Pakistani Nuclear programs.

Accepted Answer

This will shift the GG curve u

Question 5

What led to the over-extension of credit by some private banks and central banks in the euro zone prior to the 2009 euro crisis?

Accepted Answer

Differences in interest rates in euro zo

Question 6

The EU countries were prompted to seek closer coordination of monetary policies and greater exchange rate stability in order

Accepted Answer

A) to enhance Europe's role in the world monetary system. 
B) to turn the European Union into a truly unified market. 
C) both to enhance Europe's role in the world monetary system and to turn the European Union into a truly unified market. 
D) both to turn the European Union into a truly unified market and to counter the rise of Japan in international financial markets. 
E) to homogenize all European cultures. 
A) to enhance Europe's role in the world monetary system. 
B) to turn the European Union into a truly unified market. 
C) both to enhance Europe's role in the world monetary system and to turn the European Union into a truly unified market. 
D) both to turn the European Union into a truly unified market and to counter the rise of Japan in international financial markets. 
E) to homogenize all European cultures.

Question 7

The result of the reunification of eastern and western Germany in 1990

Accepted Answer

A) was a boom in Germany and higher inflation,with no effect on nearby countries. 
B) was a recession in Germany and lower inflation,with no effect on nearby countries. 
C) was a boom in Germany and higher inflation,and,with other EMS countries' commitment to fixed exchange rates,a deep recession in nearby countries. 
D) was a recession in Germany and lower inflation,and,with other EMS countries' commitment to fixed exchange rates,a deep recession in nearby countries. 
E) was a recession in Germany and lower inflation,causing a boom in nearby countries. 
A) was a boom in Germany and higher inflation,with no effect on nearby countries. 
B) was a recession in Germany and lower inflation,with no effect on nearby countries. 
C) was a boom in Germany and higher inflation,and,with other EMS countries' commitment to fixed exchange rates,a deep recession in nearby countries. 
D) was a recession in Germany and lower inflation,and,with other EMS countries' commitment to fixed exchange rates,a deep recession in nearby countries. 
E) was a recession in Germany and lower inflation,causing a boom in nearby countries.

Question 8

If Norway's labor and capital markets are highly correlated with those of its euro zone neighbors

Accepted Answer

A) unemployed workers can easily move abroad to find work and domestic capital can be shifted to more profitable uses in other countries. 
B) unemployed workers cannot easily move abroad to find work and domestic capital cannot be shifted to more profitable uses in other countries. 
C) while unemployed workers can easily move abroad to find work,domestic capital cannot be shifted to more profitable uses in other countries. 
D) while capital can easily move abroad to be put to a more profitable use,unemployed workers cannot easily move abroad to find work. 
E) unemployment will rise,thanks to competition from foreign labor. 
A) unemployed workers can easily move abroad to find work and domestic capital can be shifted to more profitable uses in other countries. 
B) unemployed workers cannot easily move abroad to find work and domestic capital cannot be shifted to more profitable uses in other countries. 
C) while unemployed workers can easily move abroad to find work,domestic capital cannot be shifted to more profitable uses in other countries. 
D) while capital can easily move abroad to be put to a more profitable use,unemployed workers cannot easily move abroad to find work. 
E) unemployment will rise,thanks to competition from foreign labor.

Question 9

Which one of the following statements is TRUE?

Accepted Answer

A) A fixed exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods. 
B) A flexible exchange rate does not automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods. 
C) A flexible exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods. 
D) A flexible exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the absolute price of domestic and foreign goods. 
E) A fixed exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the absolute price of domestic and foreign goods. 
A) A fixed exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods. 
B) A flexible exchange rate does not automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods. 
C) A flexible exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods. 
D) A flexible exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the absolute price of domestic and foreign goods. 
E) A fixed exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the absolute price of domestic and foreign goods.

Question 10

Discuss the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighboring European countries.

Accepted Answer

Germany: boom,high interest rates to fig

Question 11

"The costs and benefits for a country from joining a fixed-exchange rate area such as the EMS depend on how well-integrated its economy is with those of its potential partners." Discuss.

Accepted Answer

We will expand on this idea,which is rou

Question 12

The efficiency

Accepted Answer

A) gain from a fixed exchange rate with the euro is smaller when trade between say,Norway and the euro zone,is extensive than when it is small. 
B) gain from a fixed exchange rate with euro is greater when trade between say,Norway and the euro zone,is extensive than when it is small. 
C) loss from a fixed exchange rate with the euro is smaller when trade between say,Norway and the euro zone,is extensive than when it is small. 
D) gain from a fixed exchange rate with euro is the same as when trade between say,Norway and the euro zone,is extensive than when it is small. 
E) gain from a fixed exchange rate with euro is the same as when trade between say,Norway and the euro zone,is small than when it is small. 
A) gain from a fixed exchange rate with the euro is smaller when trade between say,Norway and the euro zone,is extensive than when it is small. 
B) gain from a fixed exchange rate with euro is greater when trade between say,Norway and the euro zone,is extensive than when it is small. 
C) loss from a fixed exchange rate with the euro is smaller when trade between say,Norway and the euro zone,is extensive than when it is small. 
D) gain from a fixed exchange rate with euro is the same as when trade between say,Norway and the euro zone,is extensive than when it is small. 
E) gain from a fixed exchange rate with euro is the same as when trade between say,Norway and the euro zone,is small than when it is small.

Question 13

Which one of the following unexpected events ignited the 2009 euro crisis?

Accepted Answer

A) Accelerating hyperinflation and political upheaval. 
B) The prospect of a sovereign default by one or more euro zone countries. 
C) Rising oil prices. 
D) Revolutions in Switzerland and Belgium. 
E) A Chinese boycott of European products. 
A) Accelerating hyperinflation and political upheaval. 
B) The prospect of a sovereign default by one or more euro zone countries. 
C) Rising oil prices. 
D) Revolutions in Switzerland and Belgium. 
E) A Chinese boycott of European products.

Question 14

The main function of the 1997 Stability and Growth Pact (SGP)was to

Accepted Answer

A) exclude a highly indebted EMU country 
B) enhance cooperation between France and Germany. 
C) make the Euro a weak currency. 
D) distribute the Euro banknote among European central banks and to create a timetable for the imposition of financial penalties on countries that fail to correct situations of "excessive" deficits and debt promptly enough. 
E) determine specialized penalties for each member nation. 
A) exclude a highly indebted EMU country 
B) enhance cooperation between France and Germany. 
C) make the Euro a weak currency. 
D) distribute the Euro banknote among European central banks and to create a timetable for the imposition of financial penalties on countries that fail to correct situations of "excessive" deficits and debt promptly enough. 
E) determine specialized penalties for each member nation.

Question 15

An inflation-prone country

Accepted Answer

A) gains from vesting its monetary policy decisions with a "conservative" central bank. 
B) loses from vesting its monetary policy decisions with a "conservative" central bank. 
C) gains from vesting its fiscal policy decisions with a "conservative" central bank. 
D) loses from vesting its fiscal policy decisions with a "conservative" central bank. 
E) remains constant when vesting its fiscal policy decisions with a "conservative" central bank. 
A) gains from vesting its monetary policy decisions with a "conservative" central bank. 
B) loses from vesting its monetary policy decisions with a "conservative" central bank. 
C) gains from vesting its fiscal policy decisions with a "conservative" central bank. 
D) loses from vesting its fiscal policy decisions with a "conservative" central bank. 
E) remains constant when vesting its fiscal policy decisions with a "conservative" central bank.

Question 16

Describe the main provisions of the Maastricht Treaty of 1991.

Accepted Answer

Called for a single currency b

Question 17

What behavior by central and private banks in euro zone countries created the conditions for the 2009 euro crisis?

Accepted Answer

Assets were accumulated by the banks thr

Question 18

The birth of the Euro

Accepted Answer

A) resulted in fixed exchange rates between all EMU member countries. 
B) resulted in flexible exchange rates between all EMU member countries. 
C) resulted in crawling-peg exchange rates between all EMU member countries. 
D) resulted in non currency board exchange rates between all EMU member countries. 
E) resulted in floating exchange rates between all EMU member countries. 
A) resulted in fixed exchange rates between all EMU member countries. 
B) resulted in flexible exchange rates between all EMU member countries. 
C) resulted in crawling-peg exchange rates between all EMU member countries. 
D) resulted in non currency board exchange rates between all EMU member countries. 
E) resulted in floating exchange rates between all EMU member countries.

Question 19

How mobile is Europe's labor force?

Accepted Answer

Differences in language and cultural dis

Question 20

During the period from 1978-2012,the difference between annual inflation rates of EU countries and the German inflation rate

Accepted Answer

A) grew at an accelerating rate. 
B) remained fairly constant. 
C) largely disappeared. 
D) went through periods of hyperinflation. 
E) trended upward at a declining rate. 
A) grew at an accelerating rate. 
B) remained fairly constant. 
C) largely disappeared. 
D) went through periods of hyperinflation. 
E) trended upward at a declining rate.

Exam 21: Optimum Currency Areas and the Euro

What event in 2009 ignited the euro crisis?

Which of the following statements is the MOST accurate?

Explain what the GG-LL model tells us about the benefits of extensive trade between EU member states and comment on the significance of similarity of economic structure in this framework.

Using the GG-LL framework,analyze the effect of Libya subsidizing the Pakistani Nuclear programs.

What led to the over-extension of credit by some private banks and central banks in the euro zone prior to the 2009 euro crisis?

The EU countries were prompted to seek closer coordination of monetary policies and greater exchange rate stability in order

The result of the reunification of eastern and western Germany in 1990

If Norway's labor and capital markets are highly correlated with those of its euro zone neighbors

Which one of the following statements is TRUE?

Discuss the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighboring European countries.

"The costs and benefits for a country from joining a fixed-exchange rate area such as the EMS depend on how well-integrated its economy is with those of its potential partners." Discuss.

The efficiency

Which one of the following unexpected events ignited the 2009 euro crisis?

The main function of the 1997 Stability and Growth Pact (SGP)was to

An inflation-prone country

Describe the main provisions of the Maastricht Treaty of 1991.

What behavior by central and private banks in euro zone countries created the conditions for the 2009 euro crisis?

The birth of the Euro

How mobile is Europe's labor force?

During the period from 1978-2012,the difference between annual inflation rates of EU countries and the German inflation rate

Introduction

World Trade: An Overview

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: An Asset Approach

Money,Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: An Historical Overview

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

Filters