Explain why the EMS countries decided to fix their exchange rates against the German DM
What will be an ideal response?
In this way, the other EMS countries in effect imported the credibility of the German central bank in fighting inflation, thus discouraging the development of inflationary pressures at home.
You might also like to view...
Under the Federal Reserve Act, which banks must be members of the Federal Reserve System?
A) all commercial banks B) national banks C) state banks D) all banks with capital in excess of $100 million
An appreciation of the U.S. dollar relative to the Japanese yen causes
A) a lower dollar-price of Japanese goods which induces the U.S. to increase their purchasing of Japanese goods. B) the quantity demanded of U.S. dollars to increase because the Japanese want to buy more U.S. goods. C) the Japanese to buy more U.S. goods, causing the dollars to appreciate further. D) the U.S. to buy less Japanese goods, causing the U.S. to depreciate.
If the potential money multiplier is 5, a $1 initial increase in demand deposits must lead to a $5 increase in demand deposits
Indicate whether the statement is true or false
If the exchange rate of the English pound goes from $1.50 to $2.00, the pound has
a. appreciated, and the English will find U.S. goods cheaper. b. appreciated, and the English will find U.S. goods more expensive. c. depreciated, and the English will find U.S. goods cheaper. d. depreciated, and the English will find U.S. goods more expensive.