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Economics Mcqs
Q
If two countries A and B are member of a currency union and there is a shift in consumer preferences away from the goods of country A and towards those of country B than which one of the following would help to offset the effect of the resulting changes in aggregate demand in A and B on inflation and unemployment in the tow countries ?
AA. A high degree of labour mobility between the tow countries
BB. An increase in government spending in country (a)
CC. A depreciation in the foreign exchange value of the common currency
DD. A low degree of capital mobility between the two countries
Correct Answer:
A. A. A high degree of labour mobility between the tow countries
