One of the Key Differences Between the United States and the European

question 26

Multiple Choice

One of the key differences between the United States and the European euro area countries in the aftermath of the Great Recession is that:

• A) U.S. inflation and unemployment are both about 4 percent, and in Europe, they are about 8 percent.
• B) GDP growth in the United States is negative, but European growth rates are higher than normal.
• C) inflation in the United States is negative, while Europe has extremely high inflation rates.
• D) the U.S. unemployment rate has largely returned to prerecession levels, whereas European unemployment is still above prerecession levels.
• E) interest rates in the United States have risen sharply, while those in the euro area are negative.

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Definitions:

Money Supply

The entire pool of financial assets in an economy, taking into account cash, coins, and all balances in checking and savings accounts, at a certain timeframe.

Recessionary Gap

A situation in economics where aggregate output is below potential output, leading to unemployment and underused resources.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Fiscal Policy

A government's use of spending and taxation to influence the economy.