Does Europe constitute an optimal common currency area? Why?
What will be an ideal response?
There is less agreement on the question. This is because neither of the two Mundell conditions appears to be satisfied. European countries have experienced very different shocks in the past. Workers move much less within European countries than they do within the United States. Because of language and cultural differences among European countries, mobility between countries is even lower.
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The slope of a consumer's budget constraint is unaffected by a change in income
a. True b. False Indicate whether the statement is true or false
If you overheard a farmer discussing his planting plans for the upcoming season, and he said "The price of corn has gone way up. I know I'll have to put some money into fertilizer on that field on the hill that's been idle all these years, but it will be worth it this year." This would be consistent with which justification for an upward sloping supply curve
A. the real-balance effect? B. increasing marginal cost? C. diminishing marginal utility? D. the need for higher prices in one good to motivate a shift in production from another?