Question 1

Which of the following resulted due to the budget reforms undertaken by the weaker economies to receive assistance?

Accepted Answer

A) Unemployment rose dramatically in the weaker economies. 
B) Taxes decreased dramatically in the weaker economies. 
C) Economic activity increased in the weaker economies. 
D) Inflation rates decreased in the weaker economies. 
A) Unemployment rose dramatically in the weaker economies. 
B) Taxes decreased dramatically in the weaker economies. 
C) Economic activity increased in the weaker economies. 
D) Inflation rates decreased in the weaker economies. A

Question 2

If Greece opted out of the euro and printed its own currency

Accepted Answer

A) the prices of domestically produced goods in Greece would rise. 
B) the prices of domestically produced goods in Greece would fall. 
C) Greece would end-up producing more labor-intensive goods. 
D) Greece would end-up producing more capital-intensive goods. 
A) the prices of domestically produced goods in Greece would rise. 
B) the prices of domestically produced goods in Greece would fall. 
C) Greece would end-up producing more labor-intensive goods. 
D) Greece would end-up producing more capital-intensive goods. B

Question 3

Article 126 of the Treaty on the functioning of the European Union stated that the member nations had to work to a debt to GDP ratio of

Accepted Answer

A) equal to 60 percent. 
B) equal to 1 percent. 
C) higher than 60 percent. 
D) less than 60 percent. 
A) equal to 60 percent. 
B) equal to 1 percent. 
C) higher than 60 percent. 
D) less than 60 percent. D

Question 4

As a result of the austerity policy

Accepted Answer

A) the AD curve shifts to AD''. 
B) the AD curve shifts to AD'. 
C) the AS curve shifts to AS'. 
D) the AS curve shifts to AS''. 
A) the AD curve shifts to AD''. 
B) the AD curve shifts to AD'. 
C) the AS curve shifts to AS'. 
D) the AS curve shifts to AS''.

Question 5

Which of the following diminished the desirability of a Greek exit?

Accepted Answer

A) The revocation of Articles 123 and 125 of the Treaty on European Union 
B) The exit of Italy and Spain from the euro 
C) The sudden rise in euro-denominated deposits 
D) The threat of a Greek exit itself 
A) The revocation of Articles 123 and 125 of the Treaty on European Union 
B) The exit of Italy and Spain from the euro 
C) The sudden rise in euro-denominated deposits 
D) The threat of a Greek exit itself

Question 6

The weaker economies in the European Union were forced to _____to be eligible to receive bailouts.

Accepted Answer

A) increase spending and taxes 
B) decrease spending and taxes 
C) increase spending and cut taxes 
D) decrease spending and increase taxes 
A) increase spending and taxes 
B) decrease spending and taxes 
C) increase spending and cut taxes 
D) decrease spending and increase taxes

Question 7

_____ countries were part of the euro currency union at the time of its creation.

Accepted Answer

A) 12 
B) 16 
C) 17 
D) 19 
A) 12 
B) 16 
C) 17 
D) 19

Question 8

The Greeks who had anticipated that Greece would opt-out of euro

Accepted Answer

A) converted their liquid assets to gold deposits. 
B) increased their euro-denominated deposits in Greek banks. 
C) closed their euro-denominated accounts and took those to foreign banks. 
D) purchased government securities from the central bank of Greece. 
A) converted their liquid assets to gold deposits. 
B) increased their euro-denominated deposits in Greek banks. 
C) closed their euro-denominated accounts and took those to foreign banks. 
D) purchased government securities from the central bank of Greece.

Question 9

In 2001, Greece had a per-capita GDP _____ percent lower than Netherland's per-capita GDP.

Accepted Answer

A) 20 
B) 30 
C) 40 
D) 50 
A) 20 
B) 30 
C) 40 
D) 50

Question 10

The formal recognition of the threat to the European Union allowed for _____ because the systemic risk clauses of Articles 123 and 125 were invoked.

Accepted Answer

A) increases in spending 
B) cross-national bailouts 
C) purchase of debt by the European Central Bank 
D) tax cuts 
A) increases in spending 
B) cross-national bailouts 
C) purchase of debt by the European Central Bank 
D) tax cuts

Question 11

In 2000, Italy's per-capita GDP was _____ percent _____ than the EU-27 average.

Accepted Answer

A) 36; lower 
B) 24; higher 
C) 18; higher 
D) 6; lower 
A) 36; lower 
B) 24; higher 
C) 18; higher 
D) 6; lower

Question 12

Relative to the first quarter of 2000, housing prices _____ in the United States between 2000 and 2009.

Accepted Answer

A) doubled 
B) tripled 
C) increased by 150 percent 
D) decreased by 100 percent 
A) doubled 
B) tripled 
C) increased by 150 percent 
D) decreased by 100 percent

Question 13

Which of the following is one of the main reasons behind the high debt to GDP ratio in Greece?

Accepted Answer

A) Population explosion 
B) Labor migration 
C) Tax evasions 
D) Capital flight 
A) Population explosion 
B) Labor migration 
C) Tax evasions 
D) Capital flight

Question 14

In 2001, Spain was _____ percent poorer than Germany.

Accepted Answer

A) 10 
B) 15 
C) 20 
D) 25 
A) 10 
B) 15 
C) 20 
D) 25

Question 15

Article 126 of the Treaty on the functioning of the European Union stated that the member nations had to maintain a deficit to GDP ratio of

Accepted Answer

A) less than 3 percent. 
B) higher than 5 percent. 
C) equal to 3 percent. 
D) equal to 4 percent. 
A) less than 3 percent. 
B) higher than 5 percent. 
C) equal to 3 percent. 
D) equal to 4 percent.

Question 16

Which of the following was an effect of the creation of the euro evident during 2001-2007?

Accepted Answer

A) Housing prices dipped to an all-time low in the richer member nations. 
B) It led to the monopolization of the foreign exchange market by the euro. 
C) Several southern European countries saw an economic downturn. 
D) The poorer member nations saw relatively rapid economic growth. 
A) Housing prices dipped to an all-time low in the richer member nations. 
B) It led to the monopolization of the foreign exchange market by the euro. 
C) Several southern European countries saw an economic downturn. 
D) The poorer member nations saw relatively rapid economic growth.

Question 17

Which of the following is true of the transition process of individual European currencies to the euro?

Accepted Answer

A) The transition process was complicated and time consuming. 
B) Bank balances in these countries were converted to euro-denominated deposits. 
C) Actual paper and coin currencies in circulation in individual countries were converted to dollars. 
D) The gold deposits that were kept by the individual countries with their central banks were recalled. 
A) The transition process was complicated and time consuming. 
B) Bank balances in these countries were converted to euro-denominated deposits. 
C) Actual paper and coin currencies in circulation in individual countries were converted to dollars. 
D) The gold deposits that were kept by the individual countries with their central banks were recalled.

Question 18

The euro, as a common currency, was in use in the financial market only between _____.

Accepted Answer

A) 1999 and 2001 
B) 2000 and 2010 
C) 1999 and 2010 
D) 2000 and 2005 
A) 1999 and 2001 
B) 2000 and 2010 
C) 1999 and 2010 
D) 2000 and 2005

Question 19

Which of the following is a possible outcome of austerity policies?

Accepted Answer

A) Increase in tax revenues 
B) Decrease in economic activity 
C) Decrease in budget deficits 
D) Increase in employment opportunities 
A) Increase in tax revenues 
B) Decrease in economic activity 
C) Decrease in budget deficits 
D) Increase in employment opportunities

Question 20

The sole mission of the European Central Bank at the time of its creation was

Accepted Answer

A) to control inflation. 
B) to boost employment. 
C) to increase saving. 
D) to reduce long-term interest rates 
A) to control inflation. 
B) to boost employment. 
C) to increase saving. 
D) to reduce long-term interest rates

Exam 19: The European Debt Crisis

Which of the following resulted due to the budget reforms undertaken by the weaker economies to receive assistance?

If Greece opted out of the euro and printed its own currency

Article 126 of the Treaty on the functioning of the European Union stated that the member nations had to work to a debt to GDP ratio of

As a result of the austerity policy

Which of the following diminished the desirability of a Greek exit?

The weaker economies in the European Union were forced to _____to be eligible to receive bailouts.

_____ countries were part of the euro currency union at the time of its creation.

The Greeks who had anticipated that Greece would opt-out of euro

In 2001, Greece had a per-capita GDP _____ percent lower than Netherland's per-capita GDP.

The formal recognition of the threat to the European Union allowed for _____ because the systemic risk clauses of Articles 123 and 125 were invoked.

In 2000, Italy's per-capita GDP was _____ percent _____ than the EU-27 average.

Relative to the first quarter of 2000, housing prices _____ in the United States between 2000 and 2009.

Which of the following is one of the main reasons behind the high debt to GDP ratio in Greece?

In 2001, Spain was _____ percent poorer than Germany.

Article 126 of the Treaty on the functioning of the European Union stated that the member nations had to maintain a deficit to GDP ratio of

Which of the following was an effect of the creation of the euro evident during 2001-2007?

Which of the following is true of the transition process of individual European currencies to the euro?

The euro, as a common currency, was in use in the financial market only between _____.

Which of the following is a possible outcome of austerity policies?

The sole mission of the European Central Bank at the time of its creation was

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Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

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Aggregate Demand and Aggregate Supply

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Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

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International Finance and Exchange Rates

Economic Growth and Development

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The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

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In 2000, Italy's per-capita GDP was _ percent _ than the EU-27 average.