Suppose that France and Spain face asymmetric economic shocks. Which of the following conditions can ensure that France and Spain form an optimal currency area?

Question

Accepted Answer

Workers can freely move between France and Spain

Answer

Prices and wages are flexible in France and Spain

Answer

Capital can freely move between France and Spain

Answer

I don't know

Answer

The trade balance between France and Spain is at equilibrium (i.e. neither France nor Spain has a trade deficit with the other)

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Suppose that France and Spain face asymmetric economic shocks. Which of the foll...

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