Which of these events would NOT count as an asymmetric macroeconomic shock?
Correct answerB. A sudden and substantial rise in prices on the world oil market
Explanation
An asymmetric shock hits one country or region differently from others; a world oil price rise affects all oil-importing economies at once, so it is broadly symmetric.
Correct answerB. Governments 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 answerC. The interest rate may be higher than is appropriate for economic conditions in some countries while it is lower than is appropriate in others; monetary policy must be one size fits all
Discussion