The European Union (EU) is an example of a :

The European Union (EU) is an example of a
 
  A) customs union.
  B) free trade area.
  C) reciprocal trade agreement.
  D) None of the above.

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Question 2 - Which of the following statements is correct?
 
  A) PPP is a theory of exchange rate determination.
  B) Inflation differentials cause changes in exchange rates.
  C) PPP is an equilibrium relationship between two endogenous variables.
  D) PPP, or the law of one price, should hold well for individual goods.

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Question 3 - The main policy advice given by the IMF to East Asian countries facing the financial crises of 1997/1998 was
 
  A) raising their domestic interest rates to stabilize the collapsing currencies.
  B) using their monetary and fiscal policies alone.
  C) use capital controls.
  D) adopting a flexible exchange rate system.
  E) adopting a fixed exchange rate system.