Leaving Certificate Business 2025 – 400 Free Practice Questions to Pass the Exam

A monetary union is a type of economic integration where member countries share a common currency and monetary policy. One of the primary advantages of a monetary union is price stability. By adopting a single currency, the member states can reduce the risks associated with exchange rate fluctuations, which often leads to more predictable pricing in trade and investment. This stability enhances consumer confidence and can lead to increased economic growth.

Moreover, a common monetary policy managed by a central authority, like the European Central Bank in the Eurozone, can help in controlling inflation across the member states, ensuring that prices do not rise excessively over time. This collective approach to monetary management fosters an environment where both consumers and businesses can plan for the future with greater certainty.

In comparison, the other options illustrate characteristics that do not align with the benefits of a monetary union. Loss of economic power and higher export tariffs suggest limitations and barriers rather than the advantages of shared economic strategies. Increased interest rates can negatively impact borrowing and spending, rather than the stability and growth that are usually the focus of a successful monetary union.