Economics, 3rd Edition

PART 15

D

uring the 1990s, a number of European nations decided to give up their national currencies and use 

a new, common currency called the euro by joining European Economic and Monetary Union (EMU). 

Why did these countries decide to do this? What are the costs and advantages of adopting a common 

currency among a group of countries? Is it optimal for Europe to have a single currency? In this chapter 

we’ll look at some of these issues, drawing on our macroeconomics tool box that we’ve been developing 

over the past several chapters.

First, a definition: a