What are the disadvantages of adopting a single currency? Explain
What will be an ideal response?
In addition to its political symbolism, the adoption of a common currency also means that the country no longer has its own money supply as a tool for managing its economic growth. A second potential cost to adopting a single currency is that countries give up their ability to alter their exchange rates. Exchange rate adjustments are sometimes the least costly way to restore competitiveness after a round of price increases.
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If bananas were used as money, which of the following functions of money would be the hardest for bananas to satisfy?
A) unit of account B) store of value C) divisibility D) medium of exchange
Crowding out is most likely to occur when the federal government:
A. Runs a surplus and pays off part of the debt. B. Balances the budget. C. Runs a deficit and raises taxes to generate more revenue. D. Runs a deficit and borrows money to finance its spending.
When the absolute price elasticity of demand equals 2.5, demand is
A) elastic. B) unit-elastic. C) inelastic. D) undetermined without more information.
The demand for ________ in a competitive industry depends on its productivity and upon how its product is valued in the marketplace.
A. only unskilled labor B. only labor in general C. only skilled labor D. any factor of production