Which of the following is a major drawback of the EMU?
A)Its inability to raise efficiency in production, thus lowering aggregate output of the member nations
B)Its inability to bring down the transaction costs of trade between member nations
C)Its inability to use monetary policies to address a recession that affects some member countries but not others
D)Its inability to keep the actual average inflation rate close to its target inflation rate

Question

Quizplus · Accepted Answer

The EMU lacks the ability to use monetary policies to address a recession that affects some member countries but not others because it has a single monetary policy for all member countries. This means that if some members are experiencing a recession, the EMU cannot adjust interest rates or the money supply to target those specific countries, potentially leading to economic inequality within the union. The other answer choices are not major drawbacks of the EMU.

Which of the Following Is a Major Drawback of the EMU