Which of the following is a problem for fiscal policy in a currency union ?

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

Related Mcqs:

Fiscal policy is weak under floating exchanges rates as fiscal expansion ?
A. crowds out imports
B. crowds out public consumption
C. crowds out exports
D. reduces the budget deficit
Which of the following is a problem for monetary policy in a currency union ?
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
What is called that bank which regularly accepts foreign currency-denominated deposits and makes foreign currency-denominated deposits and makes foreign currency loans ?
A. Eurobank
B. Foreign bank
C. International Bank
D. Multinational Bank
If export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency a depreciation of the dollar during the currency contract period ?
A. should increase the dollar value of exports
B. should not have any effect on the dollar value of U.S imports
C. must increase the balance of trade
D. All of the above
What is called the sequence of economic activity which is typically characterized by recession, fiscal recovery, growth and fiscal decline ?
A. Economic Cycle
B. Business Cycle
C. Complete Cycle
D. Cycle Business
Trade creation will more likely outweigh trade diversion for Country X that forms a customs union if the level of tariffs in Country X prior to the customs union is ________ and the total number of countries forming the customs union is _________?
A. relatively high; relatively large
B. relatively high; relatively small
C. relatively low ; relatively large
D. relatively low ; relatively small
Which of the following is not involved with fiscal policy ?
A. Income tax
B. National insurance
C. VAT
D. Interest insurance
By using fiscal policy, i (e) varying ______ and/or _____ governments achieve goals for output and employment growth as well as price stability?
A. demand pull inflation tax elasticity
B. interest rates, financial liberalization
C. interest rates, tax rates
D. tax rates, government spending
A reflationary (expansionist) fiscal policy could include ?
A. Lower interest rates
B. Increased lending by the banks
C. An increase in corporation tax
D. An increase in discretionary government spending
Expansionary fiscal policy in the classical model will cause aggregate demand to _______ potential output?
A. exceeds
B. fall below
C. fluctuate around
D. remain equal to