The theory of optimal currency areas concludes that for a currency area to have the best chance of success
A) workers in the affected country must be able to work freely in their countries.
B) prices and wages are fixed.
C) countries should have similar business cycles.
D) countries should have different economic structures.

Question

Quizplus · Accepted Answer

The theory of optimal currency areas suggests that countries should have similar business cycles to maximize the benefits of a shared currency. This is because if countries have different business cycles, they may need different monetary policies to address their economic conditions, which can cause problems in a currency union. Therefore, having similar business cycles reduces the need for individual countries to have independent monetary policies.

The Theory of Optimal Currency Areas Concludes That for a Currency