ECON 206: Problem Set 9 1) In the past there have been calls by exporters for a currency union with Australia. This would mean the Australia and New Zealand would share the same currency. [Ref: FL, Notes 7-3] a) Say Federated Farmers wanted a currency union with Australia. And, they hired you as an economist to lobby the government on their behalf. What reasons would you give to the government for forming a currency union with Australia? b) Before you start trying to convince the government about the benefits of a currency union with Australia the CEO of Federated farmers comes to you and asks you to also argue for lower interest rates as well as the currency union. You are startled by this and then slowly explain why this is impossible. What argument would you make for why it is impossible? 2) You are working for the central bank of your country. Your manager has asked you to write a report for the Governor of your central bank about the trade-off between inflation and unemployment as the Governor is thinking about what monetary policy to offer the government. One thing you know is that other economists in your bank