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:

Money

The set of assets in an economy that people regularly use to buy goods and services from other people.

Wealth

The accumulation of valuable economic resources and assets, including property, investments, and cash, that an individual or entity possesses.

Roundabout Trade

Trade involving multiple countries where goods are exported to one country before being re-exported to the final destination.

Double-Coincidence

The situation in a barter economy where two parties each hold an item the other wants, enabling an exact exchange without the need for a medium of exchange.