Currency+Union+Prep+Questions

Currency+Union+Prep+Questions - Currency Union Prep...

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Currency Union Prep Questions: 1) List the exchange rate arrangements starting with the one that gives the central bank the most flexibility to the one that allows the least flexibility. Free float, dirty (managed float), crawling peg, fixed peg, currency board, currency union 2) Which arrangement would suit a country that requires a lot of monetary policy flexibility but does not want frequent fluctuations? Managed float 3) Does similarity in demand shocks reduce or increase cost of monetary union? Reduce 4) List other ways that country(s)/states could adjust to shocks when they do not have recourse to monetary policy (say in a currency union) -Labor should be mobile, -wage should be flexible, - fiscal transfers across affected regions 5) Would removal of wage controls improve or decrease the suitability of one monetary policy for countries? Improves 6) True or False; labor mobility is unhelpful within a country with its own monetary policy but helpful for countries in a monetary union? False. Labor mobility is helpful in both cases
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This note was uploaded on 10/20/2008 for the course ECON 2100 taught by Professor Smith during the Spring '08 term at Georgia State.

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Currency+Union+Prep+Questions - Currency Union Prep...

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