Why Does the GG Schedule Have a Positive Slope

question 42

Multiple Choice

Why does the GG schedule have a positive slope?

• A) The monetary efficiency gain a country gets by joining a fixed exchange rate area falls as its economic integration with the area increases.
• B) The monetary efficiency gain a country gets by joining a fixed exchange rate area rises as its economic integration with the area decreases.
• C) The monetary efficiency gain a country gets by joining a fixed exchange rate area rises as its economic integration with the area increases.
• D) The monetary efficiency gain a country gets by joining a floating exchange rate area rises as its economic integration with the area increases.
• E) The monetary efficiency gain a country gets by joining a fixed exchange rate area is constant after their integration into the area.

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Definitions:

Dominant Strategy

In game theory, a strategy that is best no matter what the opposition does.

Players

In an economic context, players refer to individuals or entities actively participating in a market or economic model.

Strategies

Plans or methods developed to achieve a goal or solve a problem.

Nash Equilibrium

A concept within game theory where no participant can gain by unilaterally changing their strategy if the strategies of the others remain unchanged.