Title: Benefits Of Single European Currency - Free Coursework from Essay.uk.com
Headings: Benefits of single european currency
Benefits of single european currency
Examine the potential benefits to European manufactures and consumers of single European currency

Content: A single currency makes it easier for consumers to compare prices between 2 different countries and thus can buy from the cheapest source. Greater integration between firms with those in the trades goods sector as increase in supplying to the EU market rather than just the domestic market thus the full economies of scale can be exploited thus a further decrease in price for consumers. As the market size increases the supply would increase to meet the increase in demand as shown in the diagram below the supply and demand was at S1 and D1 respectively as the EU causes 11 markets to integrate into 1 large one. The demand would shift to D2 whilst supply would shift to S2 thus leading to increase in quantity supplied and demanded with little or no change in price.! Lowest costs of production as possible: As firms could and would know where the cost of production would be the lowest they would in the long run shift their factors of production to that area. For example the labor wages in France is lower than that of Germany so firms in Germany now would in the future if permitted would shift to France where everything else costs the same. Attractive investment and financing opportunities will be offered by a much broader financial market without currency risks. Investors can profit from a wider portfolio spread due to more competition between banks and insurance companies, European businesses will be able to choose between better offers. Low public debt and a controlled rate of inflation will lead to low interest rates.