Thelma Dubois
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Economics Quiz on Economics of the EU - Class 10, created by Thelma Dubois on 24/04/2017.

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Thelma Dubois
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Economics of the EU - Class 10

Question 1 of 9

1

Amongst the following benefits of joining the EMU, which one aim at boosting trade within the union?

Select one or more of the following:

  • Alternative to fixed exchange rates

  • Greater transparency

  • Lower inflation level and variability for periphery countries

  • Reduction of transactions costs

  • Reduction of exchange rates uncertainty

  • Elimination of large exchange rates depreciation

Explanation

Question 2 of 9

1

The costs of joining a common currency area...

Select one or more of the following:

  • Having a common currency

  • Having a common monetary policy

  • Assymetric shocks

  • Divergence

  • Price and wage stickiness

Explanation

Question 3 of 9

1

The costs of joining a common currency area...

Select one or more of the following:

  • Having a common currency

  • Having a common monetary policy

  • Assymetric shocks

  • Divergence

  • Price and wage stickiness

Explanation

Question 4 of 9

1

Mundell was the first economist to consider the case of asymmetric shocks in currency area in 1961.

Select one of the following:

  • True
  • False

Explanation

Question 5 of 9

1

A country suffering a negative asymmetric shock inside a currency area cannot use its exchange rate or its monetary policy to accommodate the demand shock and the common monetary policy cannot accommodate this kind of shocks. Hence adjustment has to go through:

Select one or more of the following:

  • Capital mobility

  • Price and wage flexibility

  • Structural reforms

  • Labour mobility

Explanation

Question 6 of 9

1

After a negative demand shock, price and wage should decrease so as to make the country more competitive and thus stimulate demand.

Select one of the following:

  • True
  • False

Explanation

Question 7 of 9

1

What is the main risk in case investors fear default in one country of the EMU?

Select one of the following:

  • Dragging down other countries of the union

  • Creating a liquidity crisis

  • Having inappropriate monetary policy for all members

  • Fostering cyclical divergence

Explanation

Question 8 of 9

1

By entering a monetary union, member countries become more vulnerable to movements of distrust by investors.

Select one of the following:

  • True
  • False

Explanation

Question 9 of 9

1

A schematic assessment of the current EMU as an OCA, considering additional criteria presented by economists other than Mundell:
The EMU is quite good in terms of (McKinnon 1963) and (Kenen 1969).
Although it is a condition to enter the EMU, it is lacking (Fleming 1971) and requires further (Ingram 1962) which did not work as expected.
Finally it is hindered by a very low level of (Mintz 1970) and (Tower and Willet 1976) as well as a (Kenen 1969).

Drag and drop to complete the text.

    economic openness/trade integration
    diversification production/consumption
    similarities of inflation rates
    financial market integration
    political integration
    compatibility in preferences
    non-existent fiscal integration

Explanation

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