Fiscal Federalism Can Be Argued to Be Important in a Common

question 3

Multiple Choice

Fiscal federalism can be argued to be important in a common currency area because

• A) it is likely that some member countries of the common currency area will have larger populations than others.
• B) fiscal policy is needed to stabilize the economy of any of the member countries of the common currency area if and when a member country is affected by an asymmetric macroeconomic shock.
• C) fiscal policy is a controversial issue.
• D) central banks cannot be given responsibility for fiscal policy

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Definitions:

External Locus

A psychological concept referring to individuals who believe that external forces and situations influence their life outcomes.

Internal Locus

A belief that one has control over their own life and outcomes rather than external forces.

Weak Internal

Referring to the lack of strength, structure, or robust processes within an organization's internal framework, affecting its effectiveness and efficiency.

Position Power Base

The authority or influence a person holds in an organization or group based on their role or position.