Which of the following is NOT a benefit of a monetary union?
A) Elimination of exchange rate uncertainty
B) Reduced transactions costs
C) Ability to absorb asymmetric economic shocks
D) Enhanced efficiency and competitiveness

Question

Quizplus · Accepted Answer

A monetary union can lead to a loss of ability to absorb asymmetric economic shocks since countries in the union share a common currency and interest rate policy. This can make it difficult for individual countries to adjust their economies to respond to specific shocks. Therefore, C is not a benefit of a monetary union. A, B, and D are benefits of a monetary union.

Which of the Following Is NOT a Benefit of a Monetary