Question: 1. Why do countries with less independent central banks tend to have higher inflation rates? Is it possible for the central bank to increase output and reduce unemployment in the long run? In the long run, is the German model a good one? Explain why or why not.

2. Compare the Maastricht Treaty convergence criteria with the OCA criteria. How are these convergence criteria related to the potential benefits and costs associated with joining a currency union? If you were a policy maker in a country seeking to join the EMU, which criterion would you eliminate and why?