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Questions and Answers
Which theory assumes that certain geographic regions would be more economically efficient if they adopted a single currency?
Which theory assumes that certain geographic regions would be more economically efficient if they adopted a single currency?
- Optimum Currency Area Theory (correct)
- International Fisher Effect
- Purchasing Power Parity
- Interest Rate Parity
What does the Mundell-Fleming Model assume about the price levels of goods?
What does the Mundell-Fleming Model assume about the price levels of goods?
- They are determined by the money market
- They are irrelevant
- They are constantly fluctuating
- They are fixed (correct)
What does the International Fisher Effect theory assume about nominal interest rates and exchange rates?
What does the International Fisher Effect theory assume about nominal interest rates and exchange rates?
- Nominal interest rates are always lower than exchange rates
- They are completely unrelated
- They mirror each other (correct)
- Nominal interest rates are always higher than exchange rates
