Which of the Following Is a Problem for Monetary Policy

question 55

Multiple Choice

Which of the following is a problem for monetary policy in a currency union?

• A) Money supply is more difficult to control in a currency union.
• B) The inflation-unemployment trade-off is more unstable in a currency union.
• C) All of these answers describe problems for monetary policy in a currency union.
• D) The interest rate may be higher than is appropriate for economic conditions in some countries while it's lower than is appropriate in some others - monetary policy must be "one size fits all".
• E) Monetary policy will affect the economy with a longer time lag in a large currency union than in a single country.

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Definitions:

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