Question A: The economic and financial sanctions against Russia are substantially limiting its ability to wage war on Ukraine.

Question B: In the absence of continuing flows of Western economic aid, Ukraine's wartime economy will be substantially compromised.

Question A: A constitutional rule that limits the size of budget deficits that governments can run as a share of GDP is an effective way to impose discipline on a country’s public finances.

Question B: Germany’s debt brake is a substantial constraint on vital public investment in physical/digital infrastructure and the green transition.

Question A:

The fundamental cause of Argentina’s high inflation is unfunded fiscal commitments that are being financed by the central bank.

Question B: Even if Argentina could marshal the resources to make a full switch to using US dollars for domestic transactions, it would substantially increase the volatility of Argentine GDP.

Question A: It is best for society if the management of publicly traded corporations only considers the impact of their decisions on customers, employees, and community members to the extent that these effects feedback to affect shareholder wealth.

Question B: The typical chief executive officer of a publicly traded corporation is paid more than his or her marginal contribution to the firm's value.

Question A: By enabling women’s life choices about education, work and family, the contraceptive pill made a substantial contribution to closing gender gaps in the labor market for professionals.

Question B: Gender gaps in today’s labor market arise less from differences in educational and occupational choices than from the differential career impact of parenthood and social norms around men's and women’s roles in childrearing.

Question C: The gender gap in pay would be substantially reduced if firms had fewer incentives to offer disproportionate rewards to individuals who work long and/or inflexible hours.

Question A: The EU's taxonomy for sustainable activities - a classification system that defines criteria for economic activities that are aligned with a net zero trajectory by 2050 and the broader environmental goals other than climate - is an effective way to steer greener investment and the energy transition by firms and financial institutions.


Details on the taxonomy are here:
https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en

Question B: Use of the EU taxonomy for sustainable activities is likely to stifle important innovations, including in green technology.

Question C: On balance, use of the taxonomy in EU directives and regulation is likely to be net beneficial to European citizens.

Question A: Fiscal rules on budget deficits and public debt levels are an essential part of a sound fiscal framework.

Question B: Since the inception of the Stability and Growth Pact, budget deficits in Europe have been measurably lower, on average, than would have been the case without common budget rules.

Question C: Since the inception of the Stability and Growth Pact, the path of GDP growth in Europe has been measurably more stable than would have been the case without common budget rules.

Question A: Non-bank financial intermediaries pose a substantial threat to financial stability.

Question B: Regulating the leverage and liquidity of non-bank financial intermediaries would substantially improve financial stability.

Question C: Given current regulations, non-bank financial intermediaries should not have access to central bank support.

Question A: A significant factor behind today’s inflation in Europe is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices in order to increase their profit margins.

Question B: A significant factor behind today’s inflation in some sectors of the European economy is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices in order to increase their profit margins.

Question C: A significant factor behind today’s inflation in some sectors of the European economy (both competitive and concentrated) is distortions in the aggregate economy where supply does not meet demand.

Question A: If countries could impose a ban on the use of ChatGPT and similar generative AI chatbot services that is technologically effective, they would experience a measurably negative impact on national innovation.

Question B: Regardless of whether advances in AI spur productivity growth, they are likely to create deep challenges for society – in areas from labor markets to politics, and including disinformation, privacy, crime, and warfare – that will be difficult to anticipate, plan for, and contain.

Question A: Use of artificial intelligence over the next ten years will lead to a substantial increase in the growth rates of real per capita income in the US and Western Europe over the subsequent two decades.

Question B: Use of artificial intelligence over the next ten years will have a substantially bigger impact on the growth rates of real per capita income in the US and Western Europe over the subsequent two decades than the internet has had over the past two decades.

Question A: Preserving the financial viability of France's state pension system is better achieved by raising the effective retirement age than by raising contributions while working.

Question B: Preserving the financial viability of France's state pension system is better achieved by raising the effective retirement age than by reducing benefits once retired.

Question A: Financial regulators in the US and Europe lack the tools and authority to deter runs on banks by uninsured depositors.

Question B: Not guaranteeing uninsured deposits at Silicon Valley Bank in full would have created substantial damage to the US economy.

Question C: Fully guaranteeing uninsured deposits at Silicon Valley Bank substantially increases banks’ incentives to engage in excessive risk-taking.

Question A: The amendments to the Northern Ireland protocol agreed by the UK and the EU are unlikely to have a measurable direct impact on UK growth over the next two years.

Question B: If renewed UK-EU scientific cooperation were achieved in the wake of the Windsor framework, it would be likely to have a measurable positive impact on UK growth over the next five years.

Question A: Adam Smith’s metaphor of the invisible hand has been foundational to the development of modern economic theory.

Question B: Adam Smith’s metaphor of the invisible hand has been commonly misinterpreted as advocacy for pure laissez-faire capitalism.

Question A: Loosening regulations on state aid to allow targeted incentives for companies in certain sectors will substantially improve the EU’s relative attractiveness for corporate investment.

Question B: Loosening regulations on state aid will give a substantial advantage to the economies of EU members with stronger public finances.

Question C: Even if looser regulations on state aid are temporary, they risk permanent damage to the EU’s longstanding competition policy regime.

Question A: Without government intervention, take-up of electric vehicles will be substantially less than is desirable to reduce carbon emissions.

Question B: To encourage greater take-up of electric vehicles, public expenditure on infrastructure to support them (such as charging stations) is likely to be more cost-effective than providing equivalent amounts as tax credits/purchase rebates for buyers.

Question A: Network externalities give Twitter an incumbent advantage that will slow substantially the migration of users who would prefer alternative platforms.

Question B: As of now, there needs to be more government regulation around Twitter’s content moderation and personal data protection.

Question A: The carbon border adjustment mechanism will ensure that the European Union’s green objectives are not undermined by the relocation of EU production in the sectors under the mechanism to non-EU countries with less ambitious climate policies (‘carbon leakage').

Question B: To the extent that the carbon border adjustment mechanism is effective in reducing emissions and carbon leakage, it will impose substantial costs on the economies of poorer countries.

Question A: Research on the nature and impact of bank runs has made it possible to limit the occurrence of financial crises and the economic damage they cause.

Question B: Despite repeated reforms of financial regulation (and macroprudential policies in some countries), there will always be occasional financial crises.

Question A: The UK’s removal of the cap on bankers' bonuses (introduced by the EU in 2014 and which limits payouts to two times annual base salary) will provide a measurable boost to the country’s economic growth.

Question B: Removing the cap on bankers' bonuses will measurably enhance the global competitiveness of the UK’s financial services sector.

Question C: Removing the cap on bankers' bonuses will pose a measurable risk to financial stability in the UK.

Question A: A price cap imposed by the G7/EU countries on purchases of Russian oil and oil-related products (and which applies to all importers of Russian oil using Western trade infrastructure, shipping, and insurance) would be an effective measure to reduce the flow of revenues to Russia.

Question B: The oil price cap imposed by the G7/EU countries will not have a substantial effect on the world oil price (such as the Brent crude benchmark).

Question A: The increasing share of income and wealth among the richest people in a number of advanced countries is giving significantly more political power to the wealthy.

Question B: The increasing share of income and wealth among the richest people in a number of advanced countries is having a significantly negative effect on intergenerational social mobility.

Question C: The increasing share of income and wealth among the richest people in a number of advanced countries is a major threat to capitalism.

Question A: A windfall tax on the excess profits of large oil and gas companies – with the revenue rebated to households – would be an efficient way to provide temporary relief for the average household in European countries from rising energy costs.

Question B: Fiscal measures putting a cap on consumer energy prices would be a more appropriate immediate response to increased inflation in the euro area than raising interest rates.

Stablecoins that are not fully backed by either central bank reserves or government securities with minimal price volatility are inherently vulnerable to runs.

Question A: Clearing the market for surgical face masks using prices is detrimental to the public good.

Question B: Laws to prevent high prices for essential goods in short supply in a crisis would raise social welfare.

Question C: Governments should buy essential medical supplies at what would have been the market price and redistribute according to need rather than ability to pay.

Question A: Economic damage from the virus and lockdowns will ultimately fall disproportionately hard on low- and middle-income countries.

Question B: A temporary standstill on sovereign debt payments by low- and middle-income countries to all official and private creditors to give those countries space to cover the immediate costs of the crisis would benefit advanced economies.

Question C: Export restrictions on food and medical supplies, and other protectionist measures, are likely to cost lives and slow economic recovery in all countries.

Question A: Government support to private firms in the form of debt (either directly or with the help of public guarantees) is desirable, but risks leaving them with too much leverage to invest and grow in the future.

Question B: Providing funds to viable businesses in the form of equity injections is a vital complement to debt support.

Question C: With the EU ban on state aid suspended, government capital injections should be provided via a newly created pan-European equity fund, rather than be left to national governments acting independently.

Question A:

Even with the support policies implemented by European governments in response to the crisis, low-income workers will suffer a relatively bigger hit to their incomes than those further up the distribution.

Question B: With schools across Europe closed in the lockdown, existing gaps in access to quality education between high- and low-income households will be exacerbated.

Question C: Combating the effects of the pandemic on inequality should be a priority for policy interventions.

Question A: Severe lockdowns – including closing non-essential businesses and strict limitations on people’s movement – are likely to be better for the economy in the medium term than less aggressive measures.

Question B: While national governments have responded to the crisis with substantial economic policy measures, a joint euro area fiscal response is still highly desirable.

Question C: Given the willingness of the European Central Bank to buy sovereign bonds, including Italian bonds, without limits, there is no need for ‘coronabonds’.

Question A: Even if the mortality of COVID-19 proves to be limited (similar to the number of flu deaths in a regular season), it is likely to cause a major recession.

Question B: The economic effects of COVID-19 coming from reduced spending will be larger than those coming from disruptions to supply chains and illness-related workforce reductions.

Question C: The economic policy institutions of the Eurozone are well equipped to ameliorate the potential economic damage from COVID-19.

Question A: Germany's current account surplus is undesirable even from a purely German viewpoint: the country would be better off if, for example, it ran a smaller primary surplus, in turn leading to a smaller current account surplus.

Question B: The Eurozone would be in better shape if fiscal policy were more expansionary, which would allow monetary policy to be slightly less so.

Question C: If there is a recession in the Eurozone, it will be essential to have a coordinated fiscal expansion.

Question A: The European Union goal of reaching net zero emissions of greenhouse gases by 2050 will be a major drag on economic growth.

Question B: Carbon taxes are a better way to implement climate policy than cap-and-trade.

Question C: A carbon border tax targeting imports from non-EU countries with less strict climate policies is likely to harm developing economies.

Question A: Following the UK election result, the certainty that the country is going to leave the European Union will provide a substantial short-term boost to the UK economy.

Question B: Given that the transition period currently expires at the end of 2020, there is still a considerable risk that the UK will leave the European Union without a trade agreement.

Question C: Leaving the European Union without a trade agreement would have a large negative impact on the UK economy.

Question A: Under current policies on climate change, the associated physical risks (such as those arising from total seasonal rainfall and sea level changes, and increased frequency, severity, and correlation of extreme weather events) will be at most a very small factor in monetary policy decisions over the next decade.

Question B: The physical risks associated with climate change under current policies are likely to threaten financial stability over the next decade.

Question A: Europeans would benefit more from an extra €1 billion of public R&D spent through existing (public) channels than from an extra €1 billion of private R&D spent through existing (private) channels, all else equal.

Question B: Europeans would benefit more from an extra €1 billion of public medical research spent through existing (public) channels than from an extra €1 billion of private medical research spent through existing (private) channels, all else equal.

Question A: Randomized control trials are a valuable tool for answering some long unsettled questions in development economics research.

Question B: Randomized control trials are a valuable tool for making significant progress in poverty reduction.

Question A: Having companies run to maximize shareholder value creates significant negative externalities for workers and communities.

Question B: Appropriately managed corporations could create significantly greater value than they currently do for a range of stakeholders – including workers, suppliers, customers and community members – with small impacts on shareholder value.

Question C:

Effective mechanisms for boards of directors to ensure that CEOs act in ways that balance the interests of all stakeholders would be straightforward to introduce.

Question A:

Rising inequality is straining the health of liberal democracy.

Question B: Enacting more redistributive expenditures and policies would be likely to limit the rise of populism in Europe.

Question C: European governments should allocate more resources to policies that would be likely to limit the rise of populism in Europe, even if it means higher public debt or lower public spending in other areas.

Question A:

At this point, there is little that the European Central Bank can do to increase or maintain output in the Eurozone.

Question B: When the economy is operating below its potential, larger fiscal deficits are likely to increase demand and output.

Question C: When the economy is operating below its potential and monetary policy is at the effective lower bound, fiscal policy should prioritize increasing output over decreasing public debt.

Question A:

Selecting candidates for membership of the ECB Executive Board based primarily on nationality ahead of competence is likely to have a negative effect on the quality of monetary policy in the Eurozone.

Question B: Although the central bank can never be an entirely technocratic institution, the selection process for the ECB President and members of the Executive Board is significantly worsened by intergovernmental trade-offs involving appointments to other European institutions.

On bids for infrastructure projects, the average European would be better off if Europe’s governments favored European firms over Chinese firms (or firms from any other country with non-profit-related geopolitical strategies) — even if it means sometimes choosing a higher-cost bidder.

Question A: Breaking the “doom loop” — a negative spiral that can result when banks hold sovereign bonds and governments bail out banks — would increase the stability of European economies in the event of another financial crisis.

Question B: Regulators should try to break the doom loop by assigning positive risk weights — in calculating banks’ capital requirements — to banks’ holdings of domestic and other Eurozone sovereign bonds.

Question C: Breaking the doom loop would impose substantial costs on powerful political constituencies.

Residents of big European cities would be better off, on balance, if governments did more to counter gentrification, for example by using rent and other housing subsidies, public housing investments, zoning regulations, or similar policies.

Question A: A common European deposit insurance scheme, once fully implemented, would increase the stability of European economies in the event of another financial crisis.

Question B: A common European deposit insurance scheme, once fully implemented, would increase the likelihood of another financial crisis in Europe.

Question A: Overall, public spending on the arts in Europe creates benefits that exceed the deadweight loss caused by taxation to fund it.

Question B: Additional public spending on the arts in Europe would create incremental benefits that exceed the deadweight loss caused by taxation to fund it.

Question A: The average European is better off if Europe’s competition authorities let firms merge into European champions in their sectors, even it weakens competition.

Question B: If China and other countries use policies that create giant international firms, then the average European is better off if Europe's competition authorities let firms merge into European champions in their sectors, even it weakens competition.

Question A: Letting publicly traded European firms report earnings annually rather than quarterly would lead their executives to place more weight on long-term issues in their investments and other decisions.

Question B: A switch from quarterly to annual earnings reports would, on net, benefit shareholders of European firms.

Question A: To the extent that public corporations pursue social and environmental initiatives, they tend to achieve higher risk-adjusted (private) returns than otherwise similar corporations that pursue such initiatives less.

Question B: To the extent that Norway’s global government pension fund makes investments for social and environmental objectives — apart from investments that would bring the highest expected risk-adjusted returns — it improves the welfare of Norwegians.

Question A: The fiscal rules of the European Union should give more flexibility to member countries.

Question B: The Italian budget for 2019 that the European Commission rejected in October would have increased Italy’s risk of fiscal insolvency substantially.

Question C: If France runs a 2019 budget deficit of around 3.4% of GDP, as announced by President Macron’s government, France’s risk of fiscal insolvency will increase substantially.

Question A: Capping the number of ride-sharing drivers as is being discussed in New York City, Chicago and London will make the average resident in that city worse off.

Question B:

To achieve a given level of congestion, it would be better to use taxes for driving that vary based on the level of congestion, rather than limiting the number of ride-sharing vehicles.

People who migrated to Europe between 2015 and 2018 are likely — over the next two decades — to contribute more in taxes paid than they receive in benefits and public services.

Ideas are nonrival, so increasing returns to scale is an essential feature of technological change in a market economy.

Voters overestimate the effect that current governments have on their economies’ concurrent economic performance.

Over the next decade, autonomous cars will raise average welfare in the EU by at least as much as smartphones have over the past decade.

Britain’s Labour party recently proposed giving the Bank of England a target of 3% annual labor productivity growth. Consider the following statement:

Central banks cannot significantly increase productivity growth over a ten year horizon, except perhaps by promoting macroeconomic stability.

Question A: The European Commission has proposed new rules to ensure that “digital business activities are taxed in a fair and growth-friendly way in the EU”. Consider two statements regarding this proposal:

An EU-wide 3% tax on revenue from digital activities would, on balance, be a good idea.