The Convergence Criteria for Joining the EMU Include All the Following

question 46

Multiple Choice

The convergence criteria for joining the EMU include all the following except

• A)inflation at a given low rate.
• B)the long-term interest rate at a given low rate.
• C)a budget deficit not exceeding 3 percent of GDP.
• D)government debt not exceeding 60 percent of GDP.
• E)an annual growth rate of real GDP per capita higher than 5 percent.

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Definitions:

Elastic

A term that describes the sensitivity of the demand for a good or service to a change in its price, with "elastic" demand being significantly responsive to price changes.

Least Elastic

Describes a situation where there is the smallest responsiveness of the quantity demanded or supplied to changes in price, typically associated with goods and services for which there are no close substitutes.

Price Sensitive

A term describing how the demand for a product changes in response to price changes; consumers are highly reactive to changes in price.

Elastic Demand

A situation in which the demand for a product or service significantly changes in response to a change in its price.