QUESTION Over time the euro will impact the pan-European capital market by leading to: A. an increase in the cost of capital. B. a decline in the overall level of savings and investment. C. an increased efficiency with which investment funds are allocated. D. reduced liquidity in the market. E. reduced competition among European producers. […]
QUESTION A key advantage of adopting the euro is that it: A. helps in reduction of competition in Europe. B. has prevented the development of a highly liquid pan-European capital market. C. lowers foreign exchange and hedging costs in Europe. D. insulates Europe from international competition. E. increases the range of investment options open to […]
QUESTION Which of the following is a drawback of adopting the euro? A. Loss of control over national monetary policy B. Increase in the cost of capital C. Reduction in the liquidity of capital markets D. Reduction of price differentials within the euro zone E. Loss of investment options open to both individuals and institutions […]
QUESTION Which of the following is true of the euro since its establishment in 1999? A. The value of the euro has been stable against the U.S. dollar. B. The euro’s value has steadily appreciated against the U.S. dollar. C. The euro’s value initially appreciated and then steadily depreciated against the U.S. dollar. D. The […]
QUESTION Which of the following is a reason for Great Britain, Denmark, and Sweden to stay out of the euro zone? A. The dollar peg advocated by some members of the European Union B. The implied loss of national sovereignty to the European Central Bank C. The volatility of the euro D. The reluctance to […]
QUESTION Similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate as an instrument of macroeconomic policy in a(n): A. managed currency zone. B. open exchange regime. C. optimal currency area. D. free trade area. E. advanced monetary zone. ANSWER C
QUESTION Which of the following refers to a permanent bailout fund, worth about €500 billion, set up by the euro zone nations to restore confidence in the euro? A. European Fiscal Union B. European Fiscal Compact C. Troubled Assets Relief Program D. European Stability Mechanism E. European Financial Stability Facility ANSWER D
QUESTION Which of the following is true of the provisions of the North American Free Trade Agreement? A. It does not allow financial institutions unrestricted access to the Mexican market. B. It abolishes special treatment (protection) given to Mexican energy and railway industries. C. It allows lowering of national environmental standards to lure investment. D. […]
QUESTION Which of the following is true of the criteria to qualify for membership to the European Union? A. The applicants were not required to privatize state assets. B. The applicants were not required to adopt EU laws. C. The applicants were required to tame inflation. D. The applicants were required to refrain from restructuring […]
QUESTION Which of the following is true of the Single European Act? A. It proposed to place frontier controls among European Community countries. B. It sought to abolish the application of the principle of “mutual recognition” to product standards. C. It proposed to reduce costs indirectly by preventing national suppliers to compete. D. It provided […]
