European Monetary Union - Assignment Example

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European Monetary Union

In a sense, inefficient exchange of goods, because of price stability is hence discouraged and efficient economic transactions are thus promoted.
With all the obvious constancy in prices, it's not all peaches and roses for an optimum currency area. One drawback is that member nation doesn't have the prerogative to pursue its own independent growth and stabilization policies when faced with economic mishaps that might require particular policy measures. Expansionary fiscal and monetary policies can address uptight circumstances of one nation in its desperate call, but another nation may require what is otherwise. Participating economies do not at all face similar problems more so granted with the same solutions at the same time. In a way, interregional and international differences are issues still too difficult to mitigate since business cycles that reflect upon the economy are diverse. ...
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Summary

In the discourse of the system of monetary unions, it is primarily imperative that discussions about optimum currency areas as provided by a fixed exchange rate be on the premise. This theory focuses on different national currencies' linkages to one another under permanently fixed exchange rates meeting specific conditions that make such bloc optimum in a sense currencies move all together sharing as they do a single unit as medium of exchange…
Author : veda71

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