Now That France and Germany Use a Common Currency, If

question 19

Multiple Choice

Now that France and Germany use a common currency, if there is a shift in demand away from French goods and towards German goods, then

• A) employment is likely to rise in Germany but will fall in France.
• B) unemployment will rise in Germany and inflation is likely to rise in France.
• C) there will be no macroeconomic effects.
• D) the central bank will reduce the interest rate for the common currency.

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