Chapter 7: European economics, finance and funding

Multiple Choice

1. Which of the following benefits are being maximized by the harmonization of rules for trade and investment integration?

a. risk sharing (the main traditional argument for cross-border asset trade)

b. spillover of macroeconomic fluctuations

c. product and consumption co-movements

d. all of these

2. How many of the then 15 EU members adopted the Euro as their new currency, as part of the Eurozone on 1 January 2002?

a. 10

b. 12

c. 15

d. No member countries joined on 1 January 2002.

3. Which of the following was not part of the criteria set for the Eurozone Stability and Growth Pact in 1996?

a. Government debt should not exceed 60 per cent of GDP.

b. Government deficits should not exceed 3 per cent of GDP.

c. Interest rates should be set in such a way that member countries are aligned.

d. none of these

4. What key policy instrument for managing the Eurozone monetary conditions is set by the European Central Bank?

a. national tax rates

b. interest rate for the Eurozone

c. government expenditure goals.

d. none of these

5. Which of the following are benefits of European stock exchange consolidation?

a. Market liquidity increases.

b. Market fragmentation is reduced.

c. Investment and performance ratios of capital assets in Europe increase.

d. all of these

6. Which of the following is NOT an institution with a primary responsibility for the European financial world?

a. EcoFin Council

b. European Securities Committee

c. Committee of European Securities Regulators

d. Bank for International Settlements

7. Which of the following accurately describes the benefit(s) of the Single Euro Payment Area?

a. making cross-border bank transfers

b. avoiding hidden charges

c. being able to use one bank account across the Eurozone

d. all of these

8. Which of the following was developed as an accounting standard in Europe to improve trust between companies, working together in the international value chain, where the know your customer principle is key to risk reductions?

a. Generally Accepted Accounting Principles

b. International Accounting or Financial Reporting Standard

c. European Generally Accepted Financial Reporting Standard

d. none of these

9. Which of the following is ONE of Europe’s main venture capital instruments for stimulating innovation in SMEs and entrepreneurship?

a. European Investment Bank

b. European Investment Fund

c. European Venture Capital Fund

d. European Fund for Entrepreneurship

10. Which of the following is NOT an organization with the responsibility to provide alternative sources of funding for businesses in Europe, which are not exclusively intended for European businesses?

a. CORDIS

b. INTERREG

c. EU’s Framework Programmes

d. None of these