Economic Costs

7. Economic costs and benefits of a common currency Identify whether each attribute in the following table is an advantage or disadvantage of sharing a currency across country boundaries. Attribute Advantage Disadvantage Limited scope for fiscal policy O O Protection from monetary disturbances and speculation O O Speculative attacks during currency transition O O Lower transaction costs O O Price stability O O Which of the following are reasons the United States is considered currency area? Check all that apply. Flexibility of prices and wages Limited use of fiscal policy A single monetary policy that is equally effective across borders Labor mobility