The Optimal Currency Area Involves a Trade-Off of Reducing Transaction

question 16

Multiple Choice

The optimal currency area involves a trade-off of reducing transaction costs but the inability to use changes in exchange rates to help ailing regions.If the US,Canada,and Mexico had one single currency (the Peso-Dollar) we would tend to see all of the following EXCEPT:

• A) Even more intraregional trade of goods across the three countries.
• B) Lower transaction costs of trading within North America.
• C) A greater difficulty in helping Mexico as you can no longer deflate the Mexican peso.
• D) Less migration of workers across the three countries.
• E) An elimination of correlated macroeconomic shocks across the countries.

---

Definitions:

Deafness

A condition characterized by the partial or complete inability to hear.

Pregnancy

The condition of having a developing embryo or fetus in the uterus, marked by various physical and hormonal changes in the body.

Maternal Cigarette Smoking

The act of smoking cigarettes by a mother, which can have harmful effects on fetal development and child health.

Miscarriage

The spontaneous loss of a pregnancy before the fetus can survive outside the womb, typically occurring before the 20th week of pregnancy.