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| 1 | |
The Single European Act committed the ____________ governments to a __________ in 1992. |
| | A) | European Union, single market |
| | B) | Western European, single currency area |
| | C) | European Union, single currency area |
| | D) | Western European, single market |
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| 2 | |
________________are different national regulations or practices that prevent free movement of goods, services, and factors across countries. |
| | A) | forex controls |
| | B) | capital controls |
| | C) | non-tariff barriers |
| | D) | exchange controls |
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| 3 | |
An optimal currency area is a group of countries worse off with a common currency than keeping separate national currencies. |
| | A) | True |
| | B) | False |
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| 4 | |
When the US central government sets taxes and expenditure rules that apply in its constituent states, this is described as a ___________. |
| | A) | federal fiscal system |
| | B) | federal monetary system |
| | C) | devolved fiscal system |
| | D) | devolved monetary system |
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| 5 | |
Which of the following would not be regarded as a transition economy? |
| | A) | Russia |
| | B) | Hungary |
| | C) | Poland |
| | D) | New Zealand |
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| 6 | |
In transition economies, supply-side reform means allowing _________________ to take over the role of allocating resources. |
| | A) | committees |
| | B) | the price mechanism |
| | C) | barter |
| | D) | the government |
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| 7 | |
The Stability Pact fines countries for excessive budget deficits, except if they are in recession. |
| | A) | True |
| | B) | False |
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| 8 | |
A(n) _______________ is a group of countries better off with a common currency than keeping separate national currencies. |
| | A) | optimal currency area |
| | B) | foreign exchange area |
| | C) | single currency area |
| | D) | capital controls area |
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| 9 | |
_______________means introducing the profit motive and deregulation, and allowing the price system to work. |
| | A) | Demand-side reform |
| | B) | Supply-side reform |
| | C) | State-planning reform |
| | D) | Communism |
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| 10 | |
All of the following are benefits of the Single Market except ___________. |
| | A) | it allows countries to exploit their comparative advantage more fully |
| | B) | firms could more readily exploit economies of scale |
| | C) | it intensified competition |
| | D) | it is easier to book holidays in member countries |
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| 11 | |
The ‘twin pillars’ of the monetary policy pursued by the ECB are ___________ and __________. |
| | A) | a monetary target, expected inflation |
| | B) | an interest rate target, the exchange rate |
| | C) | an unemployment target, long-run inflation |
| | D) | a budget deficit target, the natural rate of unemployment |
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| 12 | |
Most transition economies initially experienced a sharp increase in output over the first two or three years after they abandoned central planning, but then they experienced continuous stagnation in real GDP growth. |
| | A) | True |
| | B) | False |
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| 13 | |
A monetary union means __________, ____________ and ____________. |
| | A) | permanently fixed capital movements, floating exchange rates, a fixed structure of interest rates |
| | B) | permanently fixed exchange rates, free capital movements, a single interest rate |
| | C) | a common currency, a single central bank, common monetary policy |
| | D) | a common currency, floating exchange rates, common monetary policy |
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| 14 | |
The Maastricht criteria for entry to the EMU are that applicants should have _______. |
| | A) | low inflation |
| | B) | low interest rates |
| | C) | stable nominal exchange rates |
| | D) | budget deficits and government debt under control |
| | E) | all of the above |
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| 15 | |
The UK is a member of the EMU. |
| | A) | True |
| | B) | False |
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| 16 | |
In the EMU a country’s competitiveness can change because of __________. |
| | A) | interest rate adjustment |
| | B) | central bank intervention in the forex |
| | C) | domestic wage and price adjustment |
| | D) | devaluation |
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| 17 | |
The transition of Eastern European economies to market economics involves introducing ________ and ________. |
| | A) | the profit motive, deregulation |
| | B) | planning committees, incentives |
| | C) | artificially low prices, controlling demand |
| | D) | planning committees, demand management |
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| 18 | |
Fiscal federalism is when a central government sets taxes and expenditure rules that apply to its constituent states or countries. |
| | A) | True |
| | B) | False |
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| 19 | |
Economic transition involves high inflation because ____________ and ___________. |
| | A) | of high monetary growth, high wages |
| | B) | of high budget deficits, devaluation |
| | C) | of high monetary growth, devaluation |
| | D) | prices surge from an artificially low level to their equilibrium level, the inflation tax is required as a source of government revenue |
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| 20 | |
Output fell sharply in the transition economies because __________. |
| | A) | banks were unable to function |
| | B) | there was little corporate control |
| | C) | vital infrastructure was missing |
| | D) | all of the above |
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