Author Question: Explain the theories as to why the single currency was implemented quickly. What will be an ideal ... (Read 42 times)

nelaaney · **on:** Jun 30, 2018

Explain the theories as to why the single currency was implemented quickly.

What will be an ideal response?

Question 2

Harmful carbon emissions

A) are increasingly produced by industrializing countries such as China and India.
B) are only a problem in high-income countries.
C) must be reduced by countries individually.
D) have little effect on the environment.

ghepp · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

One explanation is that EU leaders believed that the potential gains were large and that the potential costs would lessen as countries became more integrated. Another explanation is that EU leaders were swept up in the excitement of the SMP and wanted to push further integration. A third explanation is that German reunification caused anxiety in some European capitals and this was a strategy to tie Germany ever more deeply into a pan-European project. One of the most widely voiced explanations is that the single currency became necessary after the removal of capital controls that took place under the SMP. Before 1990, many countries had controls on the movement of foreign exchange into their country. The removal of these controls made it easier to speculate in foreign currency markets, which is part of what led to the problems in the early 90s. Creation of a single currency reduces the frictions arising from competitive devaluations and issues of fluctuating exchange rates due to speculation.

Answer to Question 2

A