As economic similarity rises, the stability costs of a common currency decrease because there are:
A) more asymmetric shocks.
B) fewer asymmetric shocks.
C) no asymmetric shocks.
D) no symmetric shocks.

Question

Quizplus · Accepted Answer

As economic similarity rises, there are fewer differences in economic performance between countries, resulting in fewer asymmetric shocks. This means that a common currency is less likely to face destabilizing pressures, making it more stable.

As Economic Similarity Rises, the Stability Costs of a Common