The ERM crisis in ______ affected the ability of nations to ______.
A) 2001; fully fund their military forces
B) 1996; allow labor to migrate between nations
C) 1980; maintain a healthy banking system
D) 1992; maintain fixed exchange rates without drastic domestic measures
Answer: D) 1992; maintain fixed exchange rates without drastic domestic measures
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What will be an ideal response?
An argument in favor of fractional-reserve banking is that
A) unregulated institutions would be riskier than regulated fractional-reserve banks. B) it increases the precision of the central bank's control over the quantity of money. C) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else. D) it decreases the risk of a bank running out of cash.