Which of the following is a problem for monetary policy in a currency union?
A) Money supply is more difficult to control in a currency union.
B) The inflation-unemployment trade-off is more unstable in a currency union.
C) All of these answers describe problems for monetary policy in a currency union.
D) The interest rate may be higher than is appropriate for economic conditions in some countries while it's lower than is appropriate in some others - monetary policy must be "one size fits all".
E) Monetary policy will affect the economy with a longer time lag in a large currency union than in a single country.

Question

Quizplus · Accepted Answer

In a currency union, a single monetary policy must be applied to all member countries, which can lead to inappropriate interest rates for individual countries due to differing economic conditions.

Which of the Following Is a Problem for Monetary Policy