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Why Does the GG Schedule Have a Positive Slope

Question 42

Multiple Choice

Why does the GG schedule have a positive slope?


A) The monetary efficiency gain a country gets by joining a fixed exchange rate area falls as its economic integration with the area increases.
B) The monetary efficiency gain a country gets by joining a fixed exchange rate area rises as its economic integration with the area decreases.
C) The monetary efficiency gain a country gets by joining a fixed exchange rate area rises as its economic integration with the area increases.
D) The monetary efficiency gain a country gets by joining a floating exchange rate area rises as its economic integration with the area increases.
E) The monetary efficiency gain a country gets by joining a fixed exchange rate area is constant after their integration into the area.

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