The idea that nations in a currency union will have fewer trade barriers or other frictions may have the dual effect of:
A) increased integration and more risk of debt default.
B) increased political harmony and less risk of asymmetric shocks.
C) economies of scale and specialization as well as higher risk of asymmetric shocks.
D) economic growth and an increase in environmental degradation
Ans: C) economies of scale and specialization as well as higher risk of asymmetric shocks.\
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Refer to Figure 10.8. Other things equal, an increase in expected inflation would best be represented by
A) a movement from point A to point C. B) a movement from point A to point D. C) a shift from LM1 to LM2. D) a shift from LM2 to LM1.
Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?
a. Consumers have experienced an increase in income, and beef-production technology has improved. b. The price of chicken has risen, and the price of steak sauce has fallen. c. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy. d. The demand curve for beef must be positively sloped.