How Does the Eurozone Compare with the USA as a Possible

question 12

Multiple Choice

How does the eurozone compare with the USA as a possible optimal currency area (OCA) ?

• A) The eurozone has a higher degree of labour mobility than the USA and labour law is much less restrictive in the eurozone than in the USA. On these measures, the eurozone is more likely to be an OCA than is the USA.
• B) The eurozone has a lower degree of labour mobility than the USA and labour law is much more restrictive in the eurozone than in the USA. On these measures, the eurozone is less likely to be an OCA than is the USA.
• C) The eurozone has a higher degree of labour mobility than the USA but labour law is much more restrictive in the eurozone than in the USA. On these measures, it is hard to judge whether the eurozone is more or less likely to be an OCA than is the USA.
• D) The eurozone has a lower degree of labour mobility than the USA but labour law is much less restrictive in the eurozone than in the USA. On these measures, it is hard to judge whether the eurozone is more or less likely to be an OCA than is the USA.

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Definitions:

Credit Item

An entry that increases the balance in a bank account or financial statement, signifying an inflow of funds.

American Car

Refers to automobiles manufactured by companies based in the United States, known for their significant contribution to the automotive industry.

Current Account

A component of a country's balance of payments that includes the balance of trade, net income from abroad, and net current transfers.

Double-Entry Bookkeeping

An accounting practice that ensures every transaction affects two accounts, maintaining the balance of the accounting equation.