To try to overcome the free rider problem, the members of EMU signed the
A)Stability and Growth Pact.
B)European Solidarity Pact.
C)Exchange Rate Mechanism Pact.
D)Responsibility and Growth Pact.
E)Fiscal Stability Pact.

Question

Quizplus · Accepted Answer

The Stability and Growth Pact was signed by the members of EMU to overcome the free rider problem. This pact was designed to ensure fiscal discipline and prevent excessive budget deficits and public debt. It imposes rules on member countries to keep their budget deficits below 3% of GDP and public debt below 60% of GDP. This helps to prevent free riding behavior, as countries cannot simply rely on others to bear the burden of economic stabilization, but instead must take responsibility for their own fiscal discipline.

To Try to Overcome the Free Rider Problem, the Members