Which of the Following Is a Reason Why the Euro

question 164

Multiple Choice

Which of the following is a reason why the euro has not gained more on the dollar in terms of world usage during its first 10 years?

• A)International investors were unwilling to diversify their portfolios with euros because there was much speculation that the European Union will dissolve within a decade.
• B)While the U.S.government is the single issuer of its public debt, each member of the European Union issues its own debt.The smaller market for each country's debt, each with different risk premiums, makes them less liquid, especially in difficult financial times.
• C)Many member countries of the European Union, concerned that they may not be able to pull out of a national economic crisis without the ability to devalue their national currencies and encourage exports, conducted a sizeable volume of foreign transactions in the US dollar.
• D)High rates of structural unemployment in many participating countries and a decentralized tax system prevented the euro from being a premier currency in the international financial market.

---

Definitions:

Greater Percentage

A proportion or share expressed as a fraction of 100 that is larger relative to a comparison figure or within a total.

Gross Investment

Total amount spent on new capital assets without deductions for depreciation.

Rose/Fell

Terms used to indicate an increase (rose) or a decrease (fell) in a numerical value or metric.

GDP

GDP measures the aggregate value of all goods and services made within the confines of a nation over a specified period.