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International Economics, 8e (Krugman) Chapter 20 Optimum Currency Areas and the European Experience
20.1 How the European Single Currency Evolved
1) The European Economic and Monetary Union A) set up a single currency and sole bank for European economic monetary policy. B) eliminated all barriers to trade such as tax differentials between borders. C) produced a single government for handling European affairs. D) created the Common Agricultural Pact. E) None of the above. Answer: A Question Status: Previous Edition
2) The birth of the Euro A) resulted in fixed exchange rates between all EMU member countries. B) resulted in flexible exchange rates between all EMU member countries. C) resulted in crawling-peg exchange rates between all EMU member countries. D) resulted in non currency board exchange rates between all EMU member countries. E) None of the above. Answer: A Question Status: Previous Edition
3) Which of the following is true? A) All European countries are part of the EMU. B) All Western European countries are part of the EMU. C) Originally, 11 countries joined the EMU on January 1999. D) Not all Western European countries are part of the EMU. E) Both C and D. Answer: E Question Status: Previous Edition
4) The EMU created a currency area with more than A) 200 million consumers. B) 250 million consumers. C) about a billion. D) 500 million consumers. E) 300 million consumers. Answer: E Question Status: Previous Edition
5) The EU countries were prompted to seek closer coordination of monetary policies and greater exchange rate stability in order A) to enhance Europe's role in the world monetary system. B) to turn the European Union into a truly unified market. C) both to enhance Europe's role in the world monetary system and to turn the European Union into a truly unified market. D) both to turn the European Union into a truly unified
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