1. What would make a country decide to change from a common currency, like the euro, back to its own...

Question

1. What would make a country decide to change from a common currency, like the euro, back to its own currency?

2. A British pound cost $1.56 in U.S. dollars in 1996, but $1.66 in U.S. dollars in 1998.

(a) Was the pound weaker or stronger against the dollar?

(b) Did the dollar appreciate or depreciate versus the pound?

(c). Using the information from the previous Exercise 2, calculate the cost of a U.S. dollar in terms of British pounds in 1996 and 1998.

Robert · Accepted Answer

ANSWERS 
1 Having a common currency such as Euro imposes a system of central monetary policy 
which is applied uniformly to all nations. The problem that arises in such a case is that what 
is good for one country may not be so for the other. Thus, a country may shift back to its own 
currency for the following reasons: 
a. To get independence in drafting its own monetary policies. 
b.

1. What would make a country decide to change from a common currency, like the euro, back to its own currency? 2. A British pound cost $1.56 in U.S. dollars in 1996, but $1.66 in U.S. dollars in 1998....

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