When joining a common currency area each country relinquishes the use of monetary policy. (a) Explain how

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When joining a common currency area each country relinquishes the use of monetary policy.

(a) Explain how fiscal policy can be used as a substitute when undertaking stabilization policy. Use the 3-equation model to provide an example.

(b) Are there any drawbacks to stabilizing using fiscal policy?

(c) What advantages have euro area economies gained by having an independent monetary authority? Give an example of a country where this has been particularly important.

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Macroeconomics Institutions Instability And The Financial System

ISBN: 9780199655793

1st Edition

Authors: Wendy Carlin, David Soskice

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Question Posted: Jun 10, 2024 02:09 AM

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When joining a common currency area each country relinquishes the use of monetary policy. (a) Explain how

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Macroeconomics Institutions Instability And The Financial System

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