Asked by Charley Stinespring on Jul 30, 2024
Verified
Nations belonging to a common currency
A) lose the ability to maintain competitiveness by making external adjustments to their current account balances.
B) reduce their exchange-rate risk and costs of currency conversion.
C) realize all of these things.
D) sacrifice independent monetary policy.
Competitiveness
The ability of a company, industry, or nation to produce goods and services at a lower cost, with higher quality, or in a more desirable manner than competitors.
External Adjustments
Changes made outside of an organization or economy to align with changes in the external environment, such as market demand or regulatory shifts.
Monetary Policy
A central bank’s changing of the money supply to influence interest rates and assist the economy in achieving price-level stability, full employment, and economic growth.
- Acquire knowledge about the influence of shared currencies on the economic systems of nations, highlighting the risk of diminished control over monetary strategies and their impact on the balance of trade.
- Identify the effects of currency interventions and the implications of exchange rate adjustments on international trade and financial transactions.
Verified Answer
ZK
Zybrea KnightAug 03, 2024
Final Answer :
C
Explanation :
Nations in a common currency lose the ability to adjust their current account balances through external devaluations, benefit from reduced exchange-rate risk and currency conversion costs, and must give up independent monetary policy, making all the listed statements true.
Learning Objectives
- Acquire knowledge about the influence of shared currencies on the economic systems of nations, highlighting the risk of diminished control over monetary strategies and their impact on the balance of trade.
- Identify the effects of currency interventions and the implications of exchange rate adjustments on international trade and financial transactions.