40 Which of the following is NOT a negative outcome from a shared currency? The

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40 Which of the following is NOT a negative outcome from a shared currency? The exchange rate cannot offset differences in productivity growth ol over monetary policy b. c. Excessive financial inflows may result in instability trade, travel, and financial relations among countries. 41. If a group of countries trade mostly with one another, this would a. Decrease the need and advantages from a common currency. b. Simplify trade and reduce the costs and risks from trade using a common currency c. Complicate trade e arrangements with a common currency d. Create a comparative advantage for the trading leader 42. The inflexibility of the labor markets across Europe a. Has led to mass immigration b. Has created obstacles for the use of their common currency c. Has decreased the value of the Euro. d. Has increased the value of the dollar. 43.The central bank of China is known as the a. Chinese Central Bank b. Federal Bank of China c. People's Bank of China d. Bank of Asia 44. If the exchange rate currently is 1 Franc S.95, and French cheese costs 10 Francs in France. What will happen to the price of the cheese in the U.S. if the exchange rate changes to 1 Franc $1.05? a. It will increase in price from $9.50 to $10.50 b. It will decrease in price from $10.50 to $9.50 c. It will decrease in price from $9.50 to $8.50 d. It will increase in price from $10.50 to $11.50. 45. If the price of imported French wine is $30 in the U.S. when the exchange rate is $1-90 Franc, what will happen to the price of the French wine in the U.S. if the exchange rate changes to $1- 1.10 Franc? a. It will increase b. It will decrease c. It will stay the same d. All of the above are possible 46. Purchasing power parity refers to a. The ability to purchase imports with exports b. The price stability of imported goods relative to exports c. When goods cost the same in two countries using the exchange rate d. When imports maintain price stability compared to incomes 47.If the demand for a country's currency decreases, other things being equal, a. Exports will increase b. Imports will increase c. Exports will decrease d. Imports will decrease e. A and D above

Explanation / Answer

40) option d is correct answer as with shared currency travel, trade and financial relations become easier.

41) option d as countries will export goods having specialization

42) has led to mass immigration

43) People's bank of china

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