Exam 21: Optimum Currency Areas and the Euro

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Describe the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighboring European countries using the AA-DD framework.

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Question 1

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As for Germany a period of boom with high interest rates to fight inflation.
Other European countries: France, Italy and UK in recession, trying to match the high German interest rates to hold their currencies fixed against Germany's, thereby pushing their economies into deep recession. Other European countries tried to continue the fixed exchange rate in order not to lose the credibility they had build up since 1985. The policy conflict between Germany and the other European countries led to a series of fierce speculative attacks on the EMS exchange parities starting in September 1992. By August 1993, the EMS was forced to retreat to very wide (± 10 percent) bands, which was kept in force until the introduction of the euro in 1993.

Which one of the following statements is TRUE?

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Question 2

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Why does the LL schedule have a negative slope?

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Question 3

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The theory of optimum currency areas predicts that

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Question 4

What behavior by central and private banks in euro zone countries created the conditions for the 2009 euro crisis?

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Question 5

Explain how the German Bundesbank gained its low-inflation reputation.

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Question 6

If Norway's labor and capital markets are highly correlated with those of its euro zone neighbors

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Question 7

Which one of the following statements is TRUE?

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Question 8

Explain why it may make sense for the United States, Japan, and Europe to allow their mutual exchange rate to float?

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Question 9

The birth of the Euro

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Question 10

Which of the following is TRUE?

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Question 11

A key barrier to labor mobility within Europe is

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Question 12

Explain the theory of optimum currency areas.

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Question 13

A country that joins an exchange rate area

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Question 14

Explain the credibility theory of the EMS.

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Question 15

Explain why when Norway unilaterally fixes its exchange rate against the euro but leaves the krone free to float against the non-euro currencies, it is unable to keep at least some monetary independence.

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Question 16

What is the purpose of the following figure?

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Question 17

Did the 1957 Treaty of Rome turn the EU into a truly unified market?

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Question 18

How do constraints on monetary policy in the United States differ from those experienced by euro zone countries?

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Question 19

Explain why after, say Norway unilaterally pegs the krone to the euro, domestic money market disturbances will no longer affect domestic output despite the continuation of float-rate regime against non-euro currencies.

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Question 20

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Exam 21: Optimum Currency Areas and the Euro

Describe the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighboring European countries using the AA-DD framework.

Which one of the following statements is TRUE?

Why does the LL schedule have a negative slope?

The theory of optimum currency areas predicts that

What behavior by central and private banks in euro zone countries created the conditions for the 2009 euro crisis?

Explain how the German Bundesbank gained its low-inflation reputation.

If Norway's labor and capital markets are highly correlated with those of its euro zone neighbors

Which one of the following statements is TRUE?

Explain why it may make sense for the United States, Japan, and Europe to allow their mutual exchange rate to float?

The birth of the Euro

Which of the following is TRUE?

A key barrier to labor mobility within Europe is

Explain the theory of optimum currency areas.

A country that joins an exchange rate area

Explain the credibility theory of the EMS.

Explain why when Norway unilaterally fixes its exchange rate against the euro but leaves the krone free to float against the non-euro currencies, it is unable to keep at least some monetary independence.

What is the purpose of the following figure?

Did the 1957 Treaty of Rome turn the EU into a truly unified market?

How do constraints on monetary policy in the United States differ from those experienced by euro zone countries?

Explain why after, say Norway unilaterally pegs the krone to the euro, domestic money market disturbances will no longer affect domestic output despite the continuation of float-rate regime against non-euro currencies.

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

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