Which of the following is not a criterion for an optimal currency area-that is,two or more nations benefiting from adopting a common currency?
A) labor mobility among the countries
B) a substantial level of imports and exports among the countries
C) income redistribution among the countries through transfer payments
D) common economic shocks among countries
E) approximately equal levels of national income

Question

Quizplus · Accepted Answer

An optimal currency area benefits from labor mobility, substantial trade, mechanisms for income redistribution, and common economic shocks to adjust and stabilize the economy. However, having approximately equal levels of national income is not a criterion for an optimal currency area. The focus is more on the ability of regions to adjust to economic changes and shocks rather than on their initial income levels being equal.

Which of the Following Is Not a Criterion for an Optimal