Criteria used to predict the benefits of fixed exchange rates can be applied to benefits from an optimum currency union. Generally, benefits are higher whenever the:
A) home country has balanced trade with its union partners.
B) home country's economy is dissimilar to that of its union partners.
C) home country's economy is similar to that of its union partners and it suffers similar types of economic "shocks."
D) home country has large and growing trade imbalances with its union partners.
Ans: C) home country's economy is similar to that of its union partners and it suffers similar types of economic "shocks."
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Argentina in 2001 faced a debt problem more serious than the U.S. debt problem because Argentina was obligated to repay its debt in
a. U.S. dollars. b. their own currencies. c. a relatively short period of time. d. large installments.
The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is
A. wages + rent + interest + profits + indirect business taxes. B. wages + rent + interest + profits. C. wages + rent + interest + profits + indirect business taxes + depreciation. D. consumption + investment + government spending + net exports.