Economics

PART A The common specie is defined as a shared monetary unit that is shared by several(prenominal) countries. For example, the Euro dollar is the common bullion that is shared by 11 countries in the European Union. In addition, the common currency change reckon sh entirely be fixed and adopted amongst these countries so as to promote growth and sparing stability in the economies of the act countries. Therefore, defining correct value, it is the permutation rate that would shoot down choose and SUPPLY of a currency into EQUILIBRIUM e realplace the farseeing- edge. (Refer to below) jut 1.1 Fig 1.1 shows how the exchange rate is restored to equilibrium present Advantages: The common currency shared by several countries makes travelling easier for tourists where they do not need to carry too legion(predicate) different currencies in hands. Thus, a single currency makes very good economic and political sense and exit bring up the tourism labor for the ASEAN countries. Gross Domestic Product (gross domestic product) measures the substance value of all goods and services produced in an economy, as the gloominess model implies the book of make do diminishes with the distance amongst countries, therefore ASEAN countries will be benefiting from the increase in GDP as the members are neighbouring countries.

another(prenominal) advantages are humiliate transaction costs, slight exchange rate volatility, more incentives for cross-border trade and investment, and potentially lower long term interest rates. Hence, the trade within the ASEAN land will afterw ards increased as compared to other areas, w! here, the theme income could, over the long term, increase substantially. A common currency ensures transparency of pricing. That is, it will be apparent at a glance in which countries particular goods are peculiarly tacky or especially expensive, enabling purchasers to act accordingly. Moreover, it eliminates currency exchange costs, oils the wheels of the ASEAN economy, and facilitates international trade giving a more powerful...If you deficiency to get a full essay, order it on our website: OrderCustomPaper.com

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