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.

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Definitions:

Taft-Hartley Act

A 1947 U.S. federal law that restricted the activities and power of labor unions, including outlawing closed shops and permitting states to pass right-to-work laws.

Right-to-Work Laws

Legislation that prohibits union security agreements, or agreements between employers and labor unions, that govern the extent to which an established union can require employees' membership, payment of union dues, or fees as a condition of employment.

Labor Unions

Organizations that represent the interests of employees in negotiations with employers over issues like wages, working conditions, and benefits.

Traditional Institutions

Established societal structures and organizations that uphold conventional practices and norms.