Economics Dr.

Katie Sauer

Should Iceland Kill the Krona? NPRs Planet Money 4/13/2012 http://www.npr.org/blogs/money/2012/04/13/150586792/should-iceland-kill-the-krona After listening to the podcast, answer the following questions. 1. At the grocery store on the small island near Iceland, a sign announcing the exchange rates between the Norwegian krone is located by each cash register. The exchange rates are as follows: 1 Norwegian krone = _________ euros 1 Norwegian krone = _________ US dollars 1 Norwegian krone = _________ Icelandic kronas What does the exchange rate between the Norwegian krone and Icelandic krona mean?

2. What are the current problems with the krona and how did they come about?

3. Some economists have proposed that Iceland should give up its currency. What economic argument do they give?

4. How does Nobel Prize winner Robert Mundell describe this issue?

5. What are some options for Iceland if it does give up its currency? Explain.

6. Some argue that Icelands current is just the result of the market doing its job. Explain.

7. Even if the market is doing its job, how do many Icelanders feel about it?

8. They Mayor of Reykjavk (Icelands capital city) has a preference for what currency Iceland should adopt. Explain.

9. What does Icelands central bank have to say on the matter?