Author Question: Does Europe constitute an optimal common currency area? Why? What will be an ideal ... (Read 155 times)

mp14 · **on:** Jun 30, 2018

Does Europe constitute an optimal common currency area? Why?

What will be an ideal response?

Question 2

Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved?

A) K
B) NA
C) K/N
D) Y/NA
E) none of the above

Kingjoffery · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

There is less agreement on the question. This is because neither of the two Mundell conditions appears to be satisfied. European countries have experienced very different shocks in the past. Workers move much less within European countries than they do within the United States. Because of language and cultural differences among European countries, mobility between countries is even lower.

Answer to Question 2

D