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:

Industrial Relations School

A perspective or academic discipline focusing on the study of employment relationships, labor laws, and collective bargaining processes.

Taft-Hartley Act

A 1947 US federal law that restricts the activities and power of labor unions, formally known as the Labor Management Relations Act.

Government Regulation

The imposition of rules by government, backed by the use of penalties that are intended to modify the economic behavior of individuals and firms in the private sector.

Union Shop Agreements

Agreements requiring all employees in a particular company or industry to become union members as a condition of their employment.