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To try to overcome the free rider problem, the members of EMU signed ?

A. the stability and growth pack

B. the European solidarity packs

C. the exchange rate mechanism pact

D. the responsibility and growth pack

Related Questions on Monetary Union, Fiscal & Monetary Policy Mcqs

Which of the following is a problem for monetary policy in a currency union ?

A. Money supply is more difficult to control in a currency union.

B. The inflation-unemployment trade-off is more unstable in a currency union

C. All of these answers describe problems for monetary policy in a currency union

D. The interest rate may be higher than is appropriate for economic conditions in some countries while it’s lower than is appropriate in some others mo

Which of the following is a problem for fiscal policy in a currency union ?

A. The central bank controls interest rates on long-term bonds issued by the governments of the member countries of the currency union

B. Government of the member countries of the currency union may run large budget deficit and so crowd out private investment

C. government of the member countries of the currency union may run large budget deficits and so impose costs on other countries by pushing up interest r

D. It is difficult to raise enough tax revenue to pay for the operation of the currency union

What is fiscal federalism ?

A. A fiscal system for a group of countries in which fiscal policy is set in a treaty signed by all the countries

B. A fiscal system for a group of countries in which government budget deficits are strictly limited

C. A fiscal system for a group of countries involving a common fiscal budget and a system of taxes and fiscal transfers across countries

D. A fiscal system in which fiscal policy is jointly determined by local and national politicians