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:

Work in Process

Goods that are under production but not yet finalized.

Raw Materials Transactions

Financial exchanges involved in purchasing the basic substances used in production processes.

Manufacturing Overhead

All indirect costs associated with manufacturing, including utilities, rent for the manufacturing facilities, and salaries of non-direct employees.

Raw Materials Transactions

Financial and operational activities related to the acquisition and use of raw materials in the production process.