Answer to Question #139255 in Macroeconomics for Ella

Question

Assume (as a group adviser) you advise a small country whether to print their own money or use the money of its larger neighbor. How much would the national currency cost and benefit? Will the two countries have some role to play in this decision with relative political stability?

And Using this to classify a high inflation country over the past year and another low inflation country. For these two nations, it will find the rate of monetary development and the current level of nominal interest.

Answer 1

The national currency cost is associated with costs to print and introduce a new currency, and its benefit is the ability of the central bank to use the effective monetary policy without any link to the foreign government policies. Both countries have some role to play in this decision with relative political stability, but the small country has the main role.