If Several Nations Decide to Adopt and Use a Common

question 42

Multiple Choice

If several nations decide to adopt and use a common currency, then each of these nations would lose the following, except

• A) the ability to set its own interest rates.
• B) the ability to set its own tax rates.
• C) control of its own exchange rate.
• D) the use of "external adjustment" tools to deal with current-account balance problems.

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Definitions:

Multinational Strategy

A plan, used by international companies that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences.

Absolute Advantage

A concept in international trade theory that occurs when a country can produce a good more efficiently and at a lower cost than another country.