Podcast
Questions and Answers
What are the key elements that should characterize a monetary union?
What are the key elements that should characterize a monetary union?
- Total and irreversible convertibility of currencies, elimination of margins of fluctuation in exchange rates, irrevocable fixing of parity rates, and complete liberation of movements of capital (correct)
- Limited convertibility of currencies, no elimination of margins of fluctuation in exchange rates, revocable fixing of parity rates, and complete liberation of movements of capital
- Partial convertibility of currencies, allowance of margins of fluctuation in exchange rates, revocable fixing of parity rates, and restrictions on movements of capital
- Total and irreversible convertibility of currencies, elimination of margins of fluctuation in exchange rates, revocable fixing of parity rates, and complete liberation of movements of capital
What are the benefits of adopting a single currency in a monetary union?
What are the benefits of adopting a single currency in a monetary union?
- No impact on transaction costs and accounting costs
- Increase in bid-ask spreads and commissions on foreign exchange transactions
- Elimination of transaction costs and accounting costs (correct)
- Increase in transaction costs and accounting costs
What is the role of a single central bank or a system of central banks in a monetary union?
What is the role of a single central bank or a system of central banks in a monetary union?
- Eliminating the need for monetary policy
- Implementing individual country-specific monetary policies
- Restricting the flow of capital within the union
- Determining union-wide monetary policy (correct)
What is the implication of a sole external exchange rate policy in a monetary union?
What is the implication of a sole external exchange rate policy in a monetary union?
What are the costs associated with adopting a single currency in a monetary union?
What are the costs associated with adopting a single currency in a monetary union?
What is the primary implication of a monetary union having a single currency or several currencies that are fully convertible at an irrevocably fixed exchange rate?
What is the primary implication of a monetary union having a single currency or several currencies that are fully convertible at an irrevocably fixed exchange rate?
What is a key element characterizing a monetary union or currency union?
What is a key element characterizing a monetary union or currency union?
What are the costs associated with adopting a single currency in a monetary union?
What are the costs associated with adopting a single currency in a monetary union?
What is a benefit of adopting a single currency in a monetary union?
What is a benefit of adopting a single currency in a monetary union?
What is the implication of a monetary union having a sole external exchange rate policy?
What is the implication of a monetary union having a sole external exchange rate policy?
