# Which of the following is a problem for fiscal policy in a currency union ? with Answer - Economics Mcqs | TestPrep

> Solved MCQ: Which of the following is a problem for fiscal policy in a currency union ? Correct Answer: 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 rates on the bonds these countries governments issue. Verified answer explanation for FPSC, PPSC, MDCAT, NTS, and CSS competitive exam preparation.

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

Direct Answer & Quick Reference

The correct option is **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 rates on the bonds these countries governments issue**.

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 rates on the bonds these countries governments issue **(Correct Answer)**

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

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Verified Key: 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 rates on the bonds these countries governments issue
Solved by 3,340+ students

Verified against official examination board answer keys and standard curriculum textbooks.

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