Denmark is not a member of the Eurozone but is a member of the ERM. What are the advantages to Denmark of NOT being a member of the Eurozone?
A) There are none. Denmark stubbornly wants to have its own currency (the krone).
B) The Danish central bank loses its monetary autonomy by not joining the Eurozone.
C) There are not very many transactions between Denmark and Eurozone countries, so transaction gains from membership in the Eurozone would be small for Denmark.
D) The ERM allows much more exchange rate flexibility (+/- 15%) than the Eurozone.
Ans: D) The ERM allows much more exchange rate flexibility (+/- 15%) than the Eurozone.
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