Practice question · Multiple choice
Why couldn't Greece devalue its currency during the euro crisis?
Hints
- Devaluation requires having a currency of your own.
- Adjustment then has to happen through wages and prices instead.
Show the answer
A. It had the euro, so no currency to devalue
Why
In the eurozone, there is no national currency to devalue. Adjustment must come through internal devaluation, wage and price cuts, which is slower and more painful.
Practise European Integration and the Euro
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