COURSEWORK

Coursework



Coursework

Question 1 (a)

A monetary union allow a set of countries to share a common currency for trade purposes. It formulates a common exchange rate for the countries involved in an agreement to share currency. It reduces cost of transaction and a common exchange rate would result in increase in investments as compare to flexible exchange rate system. It would also cause increase in trade and reduce costs so that maximum output is achieved. In addition, it has given more power to central banks to adapt a relaxed monetary policy in order to control inflation rates by decreasing investment.

Question 1 (b)

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