Question

The euro is the currency adopted by 19 of the 28 members of the European Union....

The euro is the currency adopted by 19 of the 28 members of the European Union. Mention briefly explain at least two benefits that the Eurozone brings to businesses and consumers. Then at least one potential drawback that membership of the Eurozone can have.

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Answer #1

ANSWER:

Benefits of joining eurozone:

1. The interest rate are lower as euro isn't considered risky by investors and this leads towards more foreign investment which improves the economy of weaker nations and also the bigger companies from bigger nations tend to produce at a lower cost.

2. With larger companies investing in smaller companies , this leads to an increase in the prices and wages in the small countries and the bigger companires gain a competitive advantage as they can export more.

Potential drawback of joining eurozone:

1. The main potential drawback is that as once a country joins the euro then they can't print their own money and this way they can't control inflation by raising their interest rates.

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