At the time the monetary union in Europe began in 1999,which of the following countries declined to participate? A) France B) United Kingdom C) Italy D) Germany
Members of the European Exchange Rate Mechanism (ERM) A) agreed to buy and sell gold at a fixed rate. B) promised to maintain the values of their currencies within a fixed range. C) attempted to maintain a fixed exchange rate against the dollar. D) all agreed to charge the same interest rate on central bank loans.
All of the following are advantages of currency pegging EXCEPT A) it reduces exchange rate risk. B) it is a check against inflation. C) it provides protection for firms that have taken out loans in foreign currencies. D) it keeps the exchange rate closer to its equilibrium rate.
All of the following accurately describe China's currency peg EXCEPT A) pegging against the dollar ensured that Chinese exporters faced stable prices on exports to the United States. B) to support the exchange rate, the People's Bank of China had to buy large amounts of dollars with yuan. C) the Chinese currency was allowed to depreciate moderately in the years preceding the financial crisis. D) many economists argued that the Chinese currency was undervalued.