Question

What would make a country decide to change from a common currency, like the euro, back to its own currency?

a) To gain more control over monetary policy
b) To facilitate international trade
c) To increase financial stability
d) To join a larger economic bloc

Answer 1

A country may switch from a common currency, like the euro, back to its own currency to gain control over monetary policy, increase financial stability, or join a larger economic bloc.

Step-by-step explanation:

A country may decide to change from a common currency, like the euro, back to its own currency for a variety of reasons:

1. To gain more control over monetary policy: By having its own currency, a country can implement policies such as adjusting interest rates and money supply to stimulate its economy or curb inflation, which may not be possible under a shared currency.
2. To increase financial stability: A country may switch back to its own currency if it believes that the common currency arrangement is causing economic instability. This allows the country to have more control over its exchange rate and stabilize its economy.
3. To join a larger economic bloc: In some cases, a country may decide to change from a common currency to its own currency to join a larger economic bloc. By having its own currency, the country can maintain its independence and negotiate its own economic policies within the bloc.