Which of the following was a criterion to participate in the European Monetary Union?
A. The country's budget deficit must be less than 10 percent of the value of its gross domestic product (GDP).
B. The gross government debt must be less than 100 percent of its GDP.
C. The country's exchange rates must be maintained within the Exchange Rate Mechanism bands with no realignments during at least the previous ten years.
D. The country's inflation rate must be less than or equal to 1.5 percentage points above the average inflation rate for the three lowest-inflation EU countries.
Answer: D
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The increase in spending that occurs because the real value of money increases when the price level falls is known as the
A) price effect. B) wealth effect. C) interest rate effect. D) international trade effect.
The fact that the prices for McDonald's Big Mac sandwich are not the same around the world illustrates one reason why purchasing power does not hold: Many goods are not traded internationally
Indicate whether the statement is true or false