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Brazil, Argentina, Paraguay, Uruguay, Venezuela, and Bolivia are members of the Common Market of the South...

Brazil, Argentina, Paraguay, Uruguay, Venezuela, and Bolivia are members of the Common Market of the South (Mercado Común del Sur, or MERCOSUR), What issues should they consider before they accept or reject a common currency?

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Answer:common market: it is a free trade area created by member countries where they trade without any barrier and there is free movement of goods and services. if the member countries are adopting common currencies they will have to consider many economic factors which affects the GDP of economy so that they can decide whether to accept it or not. the following issues they will consider:

  • if the acceptance of common currency reduces the fluctuation in exchange rate or not
  • the impact of common currency on the domestic prices, interest rates and the inflation
  • the value of the common currency in world market compare to other currencies
  • if the common currency is strong enough to compete with the other international currencies because of the currency get crashed in the international market than if will affect these countries adversely.   
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