Re intro to macro

edwinesosa's version from 2015-05-03 16:39


Question Answer
benefits of monetary unioneasier to trade as lower transaction costs of changing currency and less exchange rate risk (which also leads to more fdi) + increased price transparency + help from others when in difficulty
costs of monetary unionnegatives of fixed exchange rate + 1 size fits all monetary policy + supporting struggling countries
evaluation for all demand side policiesthe classical view is that LRAS in inelastic and so even if you boost AD in the short run, in the long run it will lead to inflation and higher wage demands and SRAS to shift in, so no gain in GDP
Problems of budget deficitcrowding out + oppurtunity cost + higher interest rates + no one wants to lend

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