With multiple currencies, he believes they are more able to endure a recession. He writes, “But there are also significant advantages to having your own currency, of which the best understood is the way that devaluation – reducing the value of your currency in terms of other currencies – can sometimes ease the process of adjusting to an economic shock” (Krugman 169). By having multiple currencies, it gives flexibility to the economy. Under one currency, values are set at a higher cost of living. However, under multiple currencies, the rise and fall of wages allows countries to match their income with their goods that are being produced, helping them avoid debt. The idea of having multiple currencies can be a good idea to avoid recessions, but it has its disadvantages. For instance, troubled countries in Europe, like Spain, would have to have to deal with high unemployment until wages of workers fall to match the demand in the
With multiple currencies, he believes they are more able to endure a recession. He writes, “But there are also significant advantages to having your own currency, of which the best understood is the way that devaluation – reducing the value of your currency in terms of other currencies – can sometimes ease the process of adjusting to an economic shock” (Krugman 169). By having multiple currencies, it gives flexibility to the economy. Under one currency, values are set at a higher cost of living. However, under multiple currencies, the rise and fall of wages allows countries to match their income with their goods that are being produced, helping them avoid debt. The idea of having multiple currencies can be a good idea to avoid recessions, but it has its disadvantages. For instance, troubled countries in Europe, like Spain, would have to have to deal with high unemployment until wages of workers fall to match the demand in the