Which of the Following Is a Drawback to Having a Common

question 89

Multiple Choice

Which of the following is a drawback to having a common currency across countries, as in the European Union?

• A)A common currency increases barriers to trade across countries, reducing opportunities for economic growth.
• B)With a common currency, individual countries are no longer able to run independent monetary policies.
• C)Having a common currency implies that the prices of goods across countries must always be the same, regardless of consumer preferences for goods across countries.
• D)Having a common currency allows for coordinated monetary policy.
• E)None of the above is a drawback to a common currency.

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Definitions:

Borrowing Funds

The act of obtaining resources, typically money, from another party with the agreement to return the principal amount along with interest or other charges.

Lending Funds

The act of providing financial resources to individuals, businesses, or other entities with the expectation of future repayment with interest.

Double Coincidence of Wants

A situation in barter economies where two parties each hold an item the other wants, allowing for a direct exchange.

Medium of Exchange

An instrument or system used to facilitate the sale, purchase, or trade of goods between parties.