A high degree of real wage flexibility will tend to reduce the costs to a country of joining a currency union because
A) all of the reasons given in these answers are correct.
B) real wages fall rapidly in a recession and the economy moves quickly back to long-run equilibrium, so limiting the duration of the recession even when exchange rate adjustment is not possible.
C) workers will move from a country in which aggregate demand falls to other countries of the currency union, and so unemployment remains lower than it otherwise would.
D) real wages fall and so offset the inflationary effect of switching from the old currency to the new common currency.
Correct Answer:
Verified
Q27: If a government issues an excessive amount
Q29: A symmetric demand shock is one that
A)
Q30: Which of the following could NOT be
Q31: Going back to when France and Germany
Q32: Now that France and Germany use a
Q33: Fiscal federalism can be argued to be
Q35: How does the eurozone compare with the
Q36: Which of the following is a problem
Q37: Which one of the following is a
Q38: Which of the following is a problem
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents