Economics Mcqs

A. Money supply is more difficult to control in a currency union.
B. The inflation-unemployment trade-off is more unstable in a currency union
C. All of these answers describe problems for monetary policy in a currency union
D. The interest rate may be higher than is appropriate for economic conditions in some countries while it’s lower than is appropriate in some others monetary policy must be one size fits all

A. The central bank controls interest rates on long-term bonds issued by the governments of the member countries of the currency union
B. Government of the member countries of the currency union may run large budget deficit and so crowd out private investment
C. government of the member countries of the currency union may run large budget deficits and so impose costs on other countries by pushing up interest rates on the bonds these countries governments issue
D. It is difficult to raise enough tax revenue to pay for the operation of the currency union

A. A fiscal system for a group of countries in which fiscal policy is set in a treaty signed by all the countries
B. A fiscal system for a group of countries in which government budget deficits are strictly limited
C. A fiscal system for a group of countries involving a common fiscal budget and a system of taxes and fiscal transfers across countries
D. A fiscal system in which fiscal policy is jointly determined by local and national politicians