Question A: The Bank for International Settlements defines a central bank digital currency as follows: ‘In simple terms, a central bank digital currency (CBDC) would be a digital banknote. It could be used by individuals to pay businesses, shops or each other (a 'retail CBDC'), or between financial institutions to settle trades in financial markets (a ‘wholesale CBDC').

For developed countries, a central bank digital currency that is available to the public at large would offer social benefits that exceed the associated costs or risks.

Question B: Central banks that do not introduce their own digital money risk losing the ability to conduct effective monetary policy.

Question C: The introduction of a central bank digital currency is unlikely to have major effects on the economy.

Question A: Removing intellectual property protections on Covid-19 vaccines would substantially improve availability of the vaccines in developing countries.

Question B: Removing intellectual property protections on Covid-19 vaccines would have a negative impact on vaccine development efforts for future variants of SARS-CoV-2 or for the next pandemic.

Question C: Without an international agreement that facilitates vaccine trade, countries’ incentives to limit exports of vaccines and/or key production inputs are likely to prolong the adverse effects of the pandemic in advanced countries.

Question A: Allowing short selling of financial securities, such as stocks and government bonds, leads to prices that, on average, are closer to their fundamental values.

Question B: Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would result in significantly less short selling.

Question C: Regulatory restrictions on short selling - such as no naked shorts, temporary bans in times of crisis - make it difficult for optimists and pessimists to have equal influence on asset prices.

Question A: EU Covid-19 vaccination efforts are significantly behind those of Israel, Serbia, the UK and the US.

Offering substantially higher prices per dose would have resulted in larger capacity investments by vaccine makers and accelerated distribution in Europe significantly.

Question B: In the current situation, paying for more production capacity would be better than offering higher prices for vaccines.

Question C: If the EU started paying prices above 100 euros per dose, it would on net reduce the cost of the pandemic to the EU via more lives saved and shorter lockdowns.

Question A: Policies that aim to reduce obesity by increasing incentives for physical activity would be more welfare-improving than policies that increase the financial costs of consuming calories.

Question B: A ban on advertising junk foods (those that are high in sugar, salt and fat) would be an effective policy to reduce child obesity.

Question C: Setting targets for schools to reduce obesity (e.g. by diverting financial resources to improve school meals or add cookery to the curriculum) would reduce social welfare because schools in deprived areas, where obesity is higher, are already struggling to deliver the core curriculum.

Question A: The current US federal minimum wage is $7.25 per hour. States can choose whether to have a higher minimum - and many do.

A federal minimum wage of $15 per hour would lower employment for low-wage workers in many states.

Question B: A federal minimum wage that is pegged to state and/or local conditions such as the cost of living would be preferable to the current arrangements that give states a role in setting the policy.

Question A: The UK economy is likely to be at least several percentage points smaller in 2030 than it would have been if the country had remained in the European Union.

Question B: The aggregate economy of the 27 countries still in the EU is likely to be at least several percentage points smaller in 2030 than if the UK had not left.

Requiring Facebook to divest WhatsApp and Instagram is likely to make society better off.

Question A: Our understanding of labor productivity has been much enhanced by accounting for monetary and promotion-based incentives within firms and related selection effects.

Question B: Large salaries for senior business executives are less a reflection of an individual’s current contribution to a firm’s overall performance than a ‘prize’ for those who put in the effort to achieve one of the top positions.

Question A: A wealth tax would be an effective way to reduce inequality.

Question B: A wealth tax in a form discussed in the UK (where individuals could be taxed a percentage of their net worth over £750,000, excluding any personal pension savings and their main home) would be an effective way to improve public finances after the Covid-19 crisis.

Question C: A public policy goal that could be accomplished with a well-enforced wealth tax could be accomplished at lower cost with modifications to existing taxes, such as income tax, capital gains tax, inheritance tax and property tax.

Question A: Google's dominance of the market for internet search arose mainly from a combination of economies of scale and a quality algorithm.

Question B: In light of Google’s dominance, its current operating practices could have a substantial negative effect on social welfare in the long run.

Question C: The nature of the market dominance of technology giants in the digital economy warrants either the imposition of some kind of regulation or a fundamental change in antitrust policy.

The practical application of auction theory to the licensing of rights to use public assets like radiospectrum and other natural resources has generated substantially higher government revenues and better allocative efficiency worldwide than would have happened under previous arrangements.

Strong competition from foreign producers is likely to encourage greater private sector expenditure on research and development in the home market.

Question A: The ECB should aim to achieve an inflation rate that averages 2% over time.

Question B:

The ECB should take account of the environmental implications of its policy decisions.

Question C: The objectives set for the ECB by Treaty should make maximum sustainable employment of equal importance as price stability.

Question A: Right now, the central focus of fiscal policy should be on temporary measures to provide protection and promote rapid economic recovery rather than trying to advance other objectives, such as reducing debt, tackling climate change or addressing inequality.

Question B: Cutting taxes on firms (or delaying tax collection) will allow more of them to survive and be more effective than public spending for triggering a rapid economic recovery.

Question C: European recovery fund disbursements to crisis-hit countries should be primarily in the form of grants rather than loans.

Question D: European recovery fund disbursements to crisis-hit countries should not be made on condition of commitments to reform by recipients.

Question A: Given the social and regulatory pressures to keep prices down for drugs and vaccines to treat Covid-19, the financial incentives for pharmaceutical companies to invest in such products are below the value of the investment to society.

Question B: Government commitments to pay developers and manufacturers above average costs for an effective vaccine or drug treatments for Covid-19 would accelerate production.

Question C: Given the positive externalities from vaccination, an effective Covid-19 vaccine should have priority in public healthcare funding even in countries where other diseases cause more death and disability.

Question A: Political conflict plays a key role in shaping economic decisions, policies and outcomes.

Question B: Most European countries have larger social welfare systems than the United States in part because the latter is more heterogeneous by race and ethnicity.

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.

Question B:

If the EU decides to tax digital service providers, it would be better — given the difficulties of measuring and verifying digital activity — to tax them on the revenue, rather than the profits, that they generate locally.

The European Union often uses its antitrust powers to protect EU-based firms from international competition, rather than to promote greater competition in European markets.

Question A: Trade with China makes most Europeans better off because, among other advantages, they can buy goods that are made or assembled more cheaply in China.

Question B: Some Europeans who work in the production of competing goods, such as clothing and furniture, are made worse off by trade with China.

Question C: If the EU followed the new US steel tariffs by imposing similar EU tariffs on steel from China, it would improve Europeans’ welfare.

Question A: Assuming it exits its third bailout program this summer without an immediate restructuring or other debt relief, Greece is unlikely to default on its sovereign debt in the coming decade.

Question B: Greece would be better off if it had decided to exit the euro between 2011 and 2015.

Question C: If Greece had defaulted on (or restructured) its private debt in 2010, while also staying within the euro, that combination would have been better for Greece than either exiting the euro or proceeding as it has actually done.

Question A: Bitcoins are more similar to gold than they are to currency.

Question B: Bitcoins are more similar to gold than they are to Dutch tulips in the 1630s.

The US spends roughly 17% of GDP on healthcare, according to the OECD; most European countries spend less than 12% of GDP.

Higher quality-adjusted US healthcare prices contribute relatively more to the extra US spending than does the combination of higher quantity and quality of US care (interpreting quantity and quality to reflect both greater American healthcare needs due to underlying population health and the delivery of more or better healthcare services to Americans).

Over the past two years, all else equal, the appeal of the US as a destination for immigrants has changed in ways that will likely decrease innovation in the US economy.

Question A:

Holding other policies fixed, the average European would be better off if every European country taxed corporate profits at a rate of 20% (based as closely as possible on a common definition of profits).

Question B: If other policies were held fixed and every European country taxed corporate profits at a common rate of 20%, then reducing that common rate substantially below 20% would make the average European better off.

Question A: All else equal, if corporations throughout Europe set quotas for a minimum number of women board members, the shareholder value of European companies would increase.

Question B: Taking into account the likely effects on investments in human capital by men and women, setting quotas throughout Europe for a minimum number of women board members would generate substantial net benefits for Europeans.

Question A: Subsidizing renewable energy sources is better than taxing fossil fuels, assuming the subsidy or tax would be set at levels that would reduce carbon emissions by an equivalent amount.

Question B: Germany’s solar-energy subsidies to date have produced net social benefits for Germany.

Question C: Solar-energy subsidies to date in Germany and other countries have produced net social benefits for the world.

Insights from psychology about individual behavior – examples of which include limited rationality, low self-control, or a taste for fairness – predict several important types of observed market outcomes that fully-rational economic models do not.

The influx of refugees into Germany beginning in the summer of 2015 will generate net economic benefits for German citizens over the succeeding decade.

Question A: Holding labor market institutions and job training fixed, rising use of robots and artificial intelligence is likely to increase substantially the number of workers in advanced countries who are unemployed for long periods.

Question B: Rising use of robots and artificial intelligence in advanced countries is likely to create benefits large enough that they could be used to compensate those workers who are substantially negatively affected for their lost wages.