Higher costs result from a currency union when:
A) nations are economically dissimilar so that demand shocks affect each economy asymmetrically.
B) nations are economically similar so that demand shocks affect each economy symmetrically.
C) there is intense competition between the economies.
D) the currency is pegged to the U.S. dollar.
Ans: A) nations are economically dissimilar so that demand shocks affect each economy asymmetrically.
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If an increase in the excise tax imposed on cigarettes pushes the price per pack up by 20 percent, and the quantity sold declines by 8 percent as a result, the price elasticity of demand for cigarettes is equal to
a. -0.2. b. -0.4. c. -0.8. d. -5.
According to proponents of behavioral economics, because every possible choice cannot be considered, an individual will tend to fall back on methods of making decisions that are simpler than trying to sort through every single possibility, known as
A) rules of thumb. B) rational options. C) irrational choices. D) normative decisions.