Question

Consider the European Union of national governments that has a single Central Bank with the representatives from all countries. Discuss briefly the effectiveness of Fiscal versus Monetary Policies.

Answer 1

A single central bank with the representatives from all countries in the European countries and the effectiveness of fiscal policies and monetary policies in this regard are as follows:
The effectiveness of fiscal policy is efficiently effective in this system where one central bank is operating for all the representatives countries because the implementation of fiscal policies in this regard is equally applicable on the countries and they all are bound to follow the same policies.
In this case two policies are proposed to be implemented. i.e.
Taxation
Public expenditure.
Here single taxation system is applicable in all the representative countries.
Government is planning to issue the budget according the conditions of the countries.
So, it is beneficial to all the countries in the implementation of pre assigned policies.
Monetary policy is also equally implemented in this regard. It means the policy to control the inflationary and deflationary situation in the economy for all the countries.
It includes the policy of bank rate, CRR, SLR and Open market operati