Which of the following cases is an OCA that is NOT preferred by a home country?

Question

Quizplus · Accepted Answer

An OCA that involves facing asymmetric shocks with the other country may not be preferred by the home country because it may not have the necessary instruments to deal with those shocks. Asymmetric shocks are events that affect one country or region more severely than another. In such a scenario, the home country may need different monetary or fiscal policies compared to the other country, which could lead to policy conflicts and potential instability. Therefore, the home country may prefer an OCA where shocks are more symmetric or where the labor market is well integrated, allowing for easier adjustment to shocks. Option A and B are not the correct answers in this case because they do not address the issue of asymmetric shocks. Option D, while it can have its own disadvantages, does not directly relate to the issue of dealing with asymmetric shocks.

Which of the Following Cases Is an OCA That Is