ECN PROBLEM

6. Ins and Outs of the Eurozone [10 points] Use the FIX/OCA diagram to discuss the following pre-Brexit scenario. a. Suppose Denmark and Sweden have similar levels of symmetry and integration with the Eurozone. Draw their positions on two separate FIX/OCA diagrams below. In this setup, how could we explain why Denmark has a peg to the euro but Sweden has decided to float? [5] Answer part a using the chart below. Label axes and points carefully. Include OCA and FIX lines. In your explanation refer to other relevant economic and political considerations. Denmark Sweden Explanation:b. Suppose Greece has less symmetry and integration with the Eurozone than UK. Draw their positions on two separate FIX/OCA diagrams below. In this setup, how could we explain why Greece has joined the euro and yet the UK is floating? [5] Answer part b using the chart below. Label axes and points carefully. Include OCA and FIX lines. In your explanation refer to other relevant economic and political considerations. Greece UK Explanation