The stability pact signed by many of the countries that adopted the euro limited each member nation's deficit to 3% of GDP. This:
A)enhanced member countries' ability to conduct fiscal policy.
B)enhanced member countries' ability to conduct monetary policy.
C)limited member countries' ability to use fiscal policy.
D)did away with budget deficits altogether.

Question

Quizplus · Accepted Answer

The stability pact limited member countries' ability to use fiscal policy by setting a maximum deficit limit of 3% of GDP. This was done to promote fiscal discipline and prevent excessive government borrowing that could destabilize the eurozone. However, it also meant that member countries had less flexibility in using fiscal policy to promote economic growth or respond to economic shocks.

The Stability Pact Signed by Many of the Countries That