In View of the Theory of Optimum Currency Areas, a Country

question 12

Multiple Choice

In view of the theory of optimum currency areas, a country would be a good candidate for membership in such an area if it had a __________ degree of factor mobility with other potential member countries of the currency area and if the country were a relatively__________ economy.

• A) low; closed
• B) low; open
• C) high; closed
• D) high; open

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Definitions:

Equity Securities

Financial instruments that represent ownership in a company or an entitlement to a share in its profits.

Cost Method

An accounting approach used to measure the value of an investment, where the investment's cost includes the purchase price and any costs of acquisition.

Trading Securities

These are securities that a company holds for the purpose of selling them in the near term to profit from price variations, reported at fair value.

Comprehensive Income

The change in equity of a business enterprise during a period from transactions and other events from non-owner sources, including all revenues, gains, expenses, and losses.