Online Lesson

The Euro Makes its Debut

Introduction:

On Jan. 1, 1999 11 European countries united in the European Monetary Union. The new single currency bloc includes almost 300 million consumers and creates the second-largest economy in the world. How will this new union affect the conduct of macroeconomic policymaking among member countries?

Process:

Use the following resources and statements to answer the questions below:

• Go to to "YOUR EURO-CALCULATOR FOR THE NEW YEAR!" to determine the exchange rate for one US dollar.

• Read about the development of the European Monetary Union (EMU) and check out the latest news at TheBullseye.com (Insight into the European Monetary Unit )

• The EMU has a central bank and central monetary policymaking authority. However, fiscal policy is being conducted independently among member nations. There will be one interest rate, but 11 national budgets. Contrast this situation with the U.S. economic system: central monetary AND fiscal policymaking authority.

• The ratio of public debt to GDP for member nations must be 60 percent or less or the ratio of public debt to GDP must be sufficiently diminishing and approaching the reference value at a satisfactory pace.

• Go to the map at "Where the EU Stands on the Euro" . Look at the unemployment rates from country to country.