Which of the Following Is a Drawback to Having a Common

question 226

Multiple Choice

Which of the following is a drawback to having a common currency across countries,as in the European Union?

• A)A common currency increases barriers to trade across countries,reducing opportunities for economic growth.
• B)With a common currency,individual countries are no longer able to run independent monetary policies.
• C)Having a common currency implies that the prices of goods across countries must always be the same,regardless of consumer preferences for goods across countries.
• D)None of the above is a drawback to a common currency.

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Definitions:

Fixed Asset Turnover Ratio

A financial metric that measures a company's efficiency in using its fixed assets to generate sales, calculated by dividing sales by the book value of fixed assets.

Net Fixed Assets

The value of a company's property, plant, and equipment minus any accumulated depreciation, representing long-term investments in the business.

Sales

The exchange of goods or services for money; also refers to the function or department within a business that handles this activity.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations based on its current income.