Which of the following is a problem for monetary policy in a currency union?
A) Monetary policy will affect the economy with a longer lag than would be the case without the currency union.
B) A "one size fits all" monetary policy may lead to interest rates being too high for some economies in the union, while being too low for others.
C) Money supply is more difficult to control in a currency union than in an individual country.
D) There is more than one central bank.

Question

Quizplus · Accepted Answer

In a currency union, a single monetary policy is set for all countries in the union. This can lead to interest rates being too high for some economies and too low for others, as each economy may have different needs and circumstances. This can create imbalances and difficulties for monetary policy in the union.

Which of the Following Is a Problem for Monetary Policy