If one euro nation is experiencing rapid growth and inflation while another is facing sluggish growth and recession:
A)the European Central Bank ought to employ a tight monetary policy.
B)the European Central Bank ought to employ an easy monetary policy.
C)the two countries will disagree about the monetary policy that ought to be employed by the European Central Bank.
D)only an appreciation of the euro can help both countries simultaneously.

Question

Quizplus · Accepted Answer

Rapid growth and inflation require tight monetary policy whereas sluggish growth and recession require the opposite. Thus, the two countries will disagree about the monetary policy chosen by the European Central Bank.

If One Euro Nation Is Experiencing Rapid Growth and Inflation